Microsoft founder Bill Gates earned an average of $2.85 billion per year between 2013 and 2018, the most in the U.S. for any individual over that period, while paying an effective federal income tax rate of 18.4%. The second-highest earner during that time, media mogul and former New York City mayor Michael Bloomberg earned a bit less on average at $2.05 billion per year but paid a far lower effective tax rate of just 4.1%.
Those figures come from an analysis of IRS data on some of the highest-income taxpayers that were leaked to ProPublica last year. The table below, derived from that data, shows average incomes and tax rates for the top 15 earners between 2013 and 2018.
The data “demonstrates how the American tax system, which theoretically makes the highest earners pay the highest income tax rates, fails to do so for the people at the very top of the income pyramid,” ProPublica says.
Some fascinating details from the latest report, released this week:
* The top 400 in the list had an average annual income of at least $110 million.
* The top 11 earned more than $1 billion per year on average – an income that would require 25,000 years of work for the typical American.
* Tech billionaires (think Apple, Google, Microsoft) made up 10 of the top 15, with their high incomes coming mostly from selling stocks.
* In the top 400, hedge funder managers were the largest single segment, comprising about 20% of the group.
* Few celebrities made the top 400 – Taylor Swift’s average annual income of $82 million didn’t make the cut, nor did LeBron James’s $92 million.
* On average, Americans pay a higher tax rate as their incomes go up – but only until about $5 million per year. Above that, the trend reverses, and effective federal income tax rates fall. The top 400 pay an average rate of 22%, well below the 29% paid by those earning between $2 million and $5 million per year.
