A Trillion Dollars in One Year, and No New Taxes

In case the constant drumbeat of Wall Street Journal editorials lambasting Trump’s tariffs had you wondering which side the editors are on, their “Trump’s Smart Tax Decision” editorial surely set you straight. The editors praised President Donald Trump for “wisely” rejecting the idea of raising tax rates on “high earners” just two days after the front page of their newspaper included a prominently displayed chart with the title “The Rich Get Even Richer.” Perhaps the editors don’t read their own newspaper, not even the front page. After all, the text of the chart reads that the “share of wealth held by the top 0.1%” was 13.8% in the fourth quarter of 2024, the highest level in the chart.

No matter what headlines about the record-setting extremes of today’s inequality might appear in their newspaper, the editors remain dead set against even a modest increase in taxes on these super-rich households. Their objections are the same thread-worn arguments they have published for decades: With their “army of accountants,” the super-rich can avoid paying income taxes no matter the top rate; the super-rich already pay more than their fair share of income taxes; and, if you give the tax reformers an inch, they will want yet higher taxes and want to tax wealth.

But the editors’ arguments are no reason not to push for higher taxes on the super-rich.

An Alarming Concentration

The editors surely never read Juliet Chung’s article “Richest of Rich Gain $1 Trillion,” which ran on the second page of the Journal and was the source of that chart on the first page of the publication’s April 23 edition.

The alarming increase in the concentration of wealth in the hands of the super-rich is truly disturbing. The record-setting 13.8% household wealth share of the top 0.1% at the end of 2024 was higher than their 12.0% share of household wealth in 2007 on the eve of the 2008–2009 financial crisis, and far higher than their 8.6% share at the end of 1989, the earliest data readily available. At the same time, the wealth share of the bottom 50% of households was just 2.5% at the end of 2024. 

The wealth share going to the 19 households that gained $1 trillion in wealth in 2024, the largest one-year increase ever, is even more jaw-dropping. That group includes Elon Musk, Jeff Bezos, Mark Zuckerberg, Bill Gates, and Warren Buffet. At the end of 2024, those 19 households held 1.8% of all household wealth, or about $2.6 trillion, as documented by the research of economists Emmanuel Saez and Gabriel Zucman. In other words, 1.8% of all U.S. household wealth went to the top 0.00001%— the wealthiest 1/100,000 of 1% of households. That’s their largest wealth share on record (with data going back to 1913). It’s also 18 times greater than the 0.1% wealth share held by the 11 richest households who made up the top 0.00001% in 1982. 

Not Unequal Enough

But none of that is enough for the Wall Street Journal editors to countenance even letting the top income tax revert to 39.6%, the rate before Trump’s 2017 pro-rich tax cut lowered the top rate to 37%. That higher rate would have been levied only on individuals with taxable income greater than $626,350.

It is a bit much for the editors to argue that higher taxes on the rich are of little use and would raise little revenue because the well-to-do have access to “armies of accountants” to help them “reduce their tax liabilities” (which is a polite way of saying that they don’t pay the taxes they owe). The editors have not objected to the cuts in funding for the Internal Revenue Service (IRS) championed by Congressional Republicans and the Trump administration that have hobbled the agency’s ability to collect taxes and contributed to widening the federal government deficit, as the Congressional Budget Office has reported. On top of that, those cuts have increased tax noncompliance among the well-to-do. The top 1% of earners will account for 28% of unpaid taxes due to noncompliance in 2025, according to the estimates of the Yale Budget Lab. Worse yet, the so-called “Department of Government Efficiency” (DOGE) has already fired 7,000 IRS employees (as of mid-April), and the Trump administration has set a goal of reducing the IRS workforce by up to 40%. That’s probably another wise decision, according to the editors. After those cuts, the rich will no longer need an “army of tax accountants” to avoid paying taxes. 

The editors are convinced that the rich “pay more than their fair share in taxes” because they pay a larger share of income taxes than their share of income. For instance, in 2022, the richest 1% of taxpayers paid 40.4% of federal income taxes, which was much greater than their 22.4% share of income. But that’s hardly evidence that the rich, or the “affluent,” as the editors like to call them, pay more than their fair share of taxes.

To start with, the income tax is designed so that the bulk of the tax burden falls on households with the greatest ability to pay the tax. So it is hardly surprising that the share of income taxes paid by the richest 1% of households would be greater than their income share. 

But that difference shrinks when we look at all taxes. For other federal taxes, especially the payroll tax on employees’ wages and excise taxes, such as the gasoline tax, the effective tax rate of low- and middle-income households (how much of their income they pay in those taxes) is higher than that of better-off households. Low- and middle-income households also pay more of their income in state and local taxes, especially the sales tax that falls on households’ consumption, than do better-off households. In 2024 the richest 1% of taxpayers faced an effective state and local tax rate of just 9.2%, while the average effective rate for all taxpayers was 10.3%, and 13.5% for the lowest income quintile (20%) of taxpayers, according to a recent study conducted by the Institute on Taxation and Economic Policy (ITEP).    

Taking all of that into account, the ITEP study reports that the top 1% of taxpayers received 20.1% of household income in 2024 and paid 23.9% for all taxes (federal, state, and local). The effective tax rate of the top 1% was 25.5%, while the effective rate for all taxpayers was 19.0%. Those numbers describe a mildly progressive tax code, not the “steeply progressive” tax code the editors’ numbers paint. 

What’s more, the effective tax rate for all taxes of the super-rich is lower than that of the rest of the top 1% of taxpayers. In their book, The Triumph of Injustice, economists Saez and Zucman found that in 2018 the effective tax rate of the richest 400 taxpayers was 23%. The effective tax rate of taxpayers at the 99 percentile (the edge of the top 1%) was 29.7%. And the 23% rate of the 400 richest taxpayers was actually lower than the 24.3% average effective tax rate paid by the bottom 50% of taxpayers. Now that’s unfair.

More Tax Reform, Not Less

The Wall Street Journal editors worry that even allowing the top income tax rate to revert to 39.6% would set off demands for a yet far higher top income tax rate, or to tax wealth, not just income.  Here’s hoping they’re right. Surely in the wake of the mega-rich 0.00001% of households racking up $1 trillion of wealth gains in 2024, it is clear that taxing their wealth gains is the key to creating a tax code that would require the ultra-wealthy to pay their fair share of taxes. 

In 2019, Senator Ron Wyden (D.-Ore.) introduced a bill that would take an important step in that direction. His plan would tax the wealth gains of the richest taxpayers each year, whether those gains were realized by selling their assets that gained value or if they continue to hold those assets. Wyden would tax all capital gains at the top income tax rate. Wyden’s tax rate would be applied to taxpayers whose income exceeded $1 million or held $10 million of assets in each of the previous three years (with the threshold indexed for inflation)—approximately the top 0.3% of taxpayers. Had Wyden’s tax policy been in place in 2024, the 19 households that belong to the richest 0.00001% would have been on the hook for up to $370 billion in taxes. 

Now that would be “a smart tax decision.”

JOHN MILLER is a professor of economics at Wheaton College and a member of the Dollars & Sense collective.

SOURCES:The Budget Lab at Yale, “The Revenue and Distributional Effects of IRS Funding,” updated April 24, 2025 (budgetlab.yale.edu); Emmanuel Saez and Gabriel Zucman, “Wealth Taxation: Lessons from History and Recent Developments,” American Economic Association Papers and Proceedings, 2022 (aeaweb.org); Gabriel Zucman, “A blueprint for a coordinated minimum effective taxation standard for ultra-high-net-worth individuals,” EUTax Observatory, June 25, 2024 (taxobservatory.eu); “How Changes in Funding for the IRS Affect Revenues,” Congressional Budget Office, February 2024 (cbo.gov); Steve Wamhoff, “Who Pays Taxes in America in 2024,” Institute on Taxation and Economic Policy (ITEP), April 2024 (itep.org); Emmanuel Saez and Gabriel Zucman, The Triumph of Injustice (W.W. Norton & Company, 2019); Ranking Member Ron Wyden (D. Ore.) “Treat Wealth Like Wages,” Senate Finance Committee, April 4, 2019 (finance.senate.gov).