President Joe Biden’s Twitter account posted a questionable statistic on Saturday about how much tax American billionaires pay.
“Look, I think you should be able to become a billionaire if you can earn it, but just pay your fair share,” Biden’s tweet read. “I think you should pay a minimum of 25% tax. It’s about fundamental justice.”
The tweet included an image of a quote from Biden that said, “Do you know the average tax billionaires pay? Three percent. No billionaire should pay a lower tax than someone who works as a school teacher or a firefighter.”
But it’s unclear where the 3% figure comes from, and it contradicts numbers the White House has issued in the past.
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In February, the White House released a fact sheet entitled “The Biden Economic Plan Is Working,” which calculated how much tax the U.S. could collect if it included unrealized gains — a potential gain on an unsold asset — as income.
“In a typical year, billionaires pay an average tax rate of just 8%,” the fact sheet states. Factoring in unrealized gains is the reason for the lower statistic.
“Using the existing definition of taxable income, really wealthy people pay an average federal income tax rate in the mid-1920s,” Howard Gleckman, a senior fellow at the Brookings Institution Tax Policy Center, told PolitiFact in July. “If you wanted to include unrealized gains in your denominator, as the White House does, the average rate would go much lower.”
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Another White House figure from 2021 gave a figure of 8% instead of the 3% Biden recently quoted.
OMB and CEA economists’ analysis estimates that America’s wealthiest 400 billionaire families paid an average of just 8.2 percent of their incomes between 2010 and 2018 — including income from their assets that remains largely untaxed — in federal individual income taxes. a lower rate than many ordinary Americans pay,” the 2021 post read.
In response, Twitter CEO Elon Musk disputed Biden’s tax claim.
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“I paid 53% tax on my Tesla stock options (40% federal and 13% state), so I have to average out!” wrote the South African entrepreneur. “I also paid more income tax than anyone else in Earth’s history for 2021 and will do so again in 2022.”
“Would be curious to hear how these other ‘billionaires’ are so good at avoiding taxes!” Musk added another tweet, after asking Twitter’s Community Notes feature to fact-check the statement.
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