The White House released an analysis on Thursday estimating that the 400 wealthiest American families paid an average federal income tax rate of only 8.2 percent on $1.8 trillion of income from 2010 to 2018.
"Two factors that contribute to this low estimated tax rate include low tax rates on the capital gains and dividends that are taxed, and wealthy families’ ability to permanently avoid paying tax on investment gains that are excluded from taxable income," the report said.
The analysis, which was authored by economists from the White House Council of Economic Advisers and the Office of Management and Budget, comes as Democrats in Congress are working on a tax-and-spending package that would advance much of President BidenJoe BidenMan sentenced to nearly four years for running scam Trump, Biden PACs Dole in final column: 'Too many of us have sacrificed too much' Meadows says Trump's blood oxygen level was dangerously low when he had COVID-19 MORE's agenda. Biden has proposed a number of tax increases on the wealthy and corporations in order to pay for his spending priorities in areas such as health care and child care, and he is seeking to prevent moderate congressional Democrats from scaling back these proposals.
The White House analysis is based on IRS statistics, the Federal Reserve's Survey of Consumer Finances and Forbes magazine estimates about the 400 wealthiest Americans.
The White House noted that its estimate of the tax rate for the wealthiest households is "much lower" than other groups' estimates of top income tax rates. The administration's takes into account income from unrealized capital gains, which is not typically included in this type of analysis.
The report highlighted Biden's proposals to raise the top capital gains rate and end the "stepped-up basis" tax preference that benefits heirs as ways to address the fact that wealthy Americans pay a low tax rate.
Legislation approved by the House Ways and Means Committee earlier this month included a smaller capital gains increase than Biden had proposed and does not repeal stepped-up basis. But Senate Democrats are expected to offer their own ideas for how to pay for the spending package, and Finance Committee Chairman Ron WydenRonald (Ron) Lee WydenSenate parliamentarian looms over White House spending bill Democrats push tax credits to bolster clean energy Five reasons for concern about Democrats' drug price control plan MORE (D-Ore.) has indicated that he wants to prevent billionaires and their heirs from avoiding taxes on stock gains.
Wyden said in a statement Thursday that "the White House’s new report is shocking but not surprising."