Do the rich pay their fair share?

Paying your fair share of taxes strikes at the heart of fundamental fairness. Does everyone play by the same rules? Does our government have the resources it needs to provide the services we all rely on, from schools to roads to firefighters?

The importance of fair taxation has taken on new urgency. As corporate profits and billionaire wealth surge, families are struggling to pay the bills as our climate sleepwalks to catastrophe.

“We can either have democracy in this country or we can have great wealth concentrated in the hands of a few, but we can’t have both,” famously said former U.S. Supreme Court Justice Louis Brandeis.

At Oxfam, we’ve been tracking the rise in corporate power and billionaire wealth for years. So we’re going to answer the question, step by step: Whether billionaires and giant corporations pay their fair share, and what the rich paying their fair share would mean for something as ambitious as ending poverty and injustice.

Do billionaires pay their fair share?

Billionaires in the U.S. pay a smaller tax rate than most teachers and retail workers. Thanks to a tax code that favors income from wealth over income from work—and a slew of tax-avoidance strategies—the richest among us end up paying a smaller percentage of their income to the federal government than most working families.

Here’s what we know:

• U.S. billionaires are 46 percent, or $1.6 trillion, richer than they were in 2020.
  
  
• According to a 2021 White House study, the wealthiest 400 billionaire families in the U.S. paid an average federal individual tax rate of just 8.2 percent. For comparison, the average American taxpayer in the same year paid 13 percent.
  
  
• According to leaked tax returns highlighted in a ProPublica investigation, the 25 richest Americans paid $13.6 billion in taxes from 2014-2018—a “true” tax rate of just 3.4 percent on $401 billion of income.
  

That’s not paying your fair share. Instead of rewarding wealth over work, our tax system should ensure that billionaires play by the same set of rules as the rest of us. It’s good for the planet, and it’s essential to the preservation of our democracy.

So what should they pay?

• Higher tax rates: The IRS code should raise individual tax rates for billionaires and equalize taxes on capital gains and labor income so work isn’t taxed more than wealth.
  
  
• A fair tax on their wealth: Billionaires should pay a wealth tax, and we should close tax loopholes that permit the rich to stash profits in tax havens.
  

“In reality, taxation is a sign of legality and justice," said Pope Francis.

Do giant corporations pay their fair share?

While giant companies enjoyed record profits in recent years, many still pay lower tax rates than most working families. That’s in part because many take advantage of generous tax breaks and stash profits in tax havens around the world.

Here’s what we know:

• According to the Institute on Taxation and Economic Policy, at least 55 of the largest corporations in America paid no federal corporate income taxes in 2020.
  
  
• The US government is estimated to have lost around $135 billion in revenue due to corporate tax avoidance in 2017. In contrast, corporate philanthropy has amounted to less than $20 billion a year.
  
  
• Corporations shifted nearly $1 trillion in global profits to tax havens in 2022—depriving countries all over the world of desperately needed tax revenue.
  

That’s not paying your fair share. Instead of only maximizing profits for their overwhelmingly rich, white shareholders, corporations should do more to support the employees, consumers, and community members that corporations rely upon to make their money.

So what should they pay and do?

• To reduce tax haven abuse and the offshoring of corporate profits, corporations should pay the same tax rate on their foreign profits as on their domestic profits, and all large multinational corporations should pay a global minimum tax rate.
  
  
• To end the secrecy that shrouds corporate tax dodging, corporations should publish key financial data like revenue, profits, and taxes paid on a country-by-country basis.

“We want an economy that works for everyone, not just for a small elite,” said former U.S. Labor Secretary Robert Reich.

What would the rich paying their fair share mean for ending poverty and injustice?

Taxing the rich would pay incredible dividends in ending poverty and injustice. Calculations from Oxfam found that a progressive wealth tax on US multi-millionaires and billionaires could generate $664 billion dollars every year to help lift people out of poverty.

That kind of revenue would allow the US to invest in programs that:

• Protect the climate
  • Building off climate investments in the 2022 Inflation Reduction Act, we could fund tax credits for consumers and companies to cut carbon emissions and support the creation of a 21st century Civilian Conservation Corps—a jobs program to actively combat the climate crisis.
    
    
• Lift children out of poverty
  • Reinstating the child tax credit could lift more children out of poverty. The credit reached more than 60 million children in 2021, cutting child poverty by 30 percent. We could also fund child nutrition waivers used by 90 percent of US schools to fight childhood hunger by providing lunches to children in need.

All of these programs would provide big benefits for workers, caregivers, and communities of color—unlike corporate tax dodging, which just benefits a white, wealthy elite.

“It’s time for our nation’s billionaires and giant corporations to contribute their fair share of taxes to support the very people who have provided the labor that has allowed them to enjoy record profits and excess wealth,” said Gina Cummings, Oxfam America’s Vice-President of Advocacy, Alliances and Policy.

Conclusion

When billionaires and corporations rig the rules to pay a smaller percentage of taxes than the average American tax payer, they’re not paying their fair share. Everyone should play by the same set of rules, and working families shouldn’t bear more than their fair share.

By increasing tax rates on the richest Americans, taxing billionaire wealth, and making corporations pay their fair share, we can ensure that the rich help protect the climate and lift children out of poverty. And it’s key to saving our democracy and solving our toughest global challenges.

Hundreds of thousands of people like you have joined Oxfam to demand the rich pay their fair share in taxes. Your voice in this fight matters, and when we join our voices together, our message becomes impossible to ignore.