PolitiFact – President Joe Biden distorts income tax rates for the richest Americans

In a recent speech touting his economic policies, President Joe Biden took the opportunity to take aim at the tax rates of the wealthiest Americans.

During the president’s Jan. 25 stop in Superior, he said, “There are a thousand billionaires now and you know what their average tax rate is? 8%.”

Biden has used this figure before, but it’s inaccurate because it uses a hypothetical calculation and isn’t a reference to the current tax code.

In fact, a PolitiFact rating from 2022 fact-checked the same claim and found it false. Here is what we previously found.

What is the average federal income tax for the richest Americans?

When we asked the White House back in 2022 about the 8% figure, it told PolitiFact that it comes from a White House report that looked at what would happen if the United States were to tax unrealized gains on stocks. 

Currently, if people see their stock shares rise in value over time, those gains are not taxed unless and until the shares are sold. If the shares are never sold, then they are never taxed, and under current law, they may be passed on to the next generation with little or no taxation.

The White House report found that if you include unrealized gains in the income calculations of the 400 richest U.S. families, then their taxes paid would account for just 8.2% of their income.

Economists and policymakers have long debated whether the government should tax unrealized gains. But Biden made it sound as if 8% was the standard rate today, not what would happen under a potential future proposal. 

IRS data from 2020 shows that the top 1% of taxpayers paid an average federal income tax rate of 25.99% — about three times more than the White House’s estimate.

Our ruling

Biden said “There are a thousand billionaires now and you know what their average tax rate is? 8%.”

The wealthiest Americans currently pay an effective tax rate of more than 20% of their income, not 8%.

Again, we rate Biden’s statement False.