And realized capital gains are wildly volatile, so top thresholds lurch around year to year. That matters, because many wealth tax proposals target tiny slices. $50M in wealth is ~0.14% of households. $250M is ~16,000 of them. 4/

Income is even messier. Economists count things you probably don't think of as income: Employer's share of payroll taxes & value of an employee's health insurance. Some scale by household size. Simplest measure: top 0.1% in 2022 was $2.9M with capital gains, $2.3M without. 3/

Start with wealth, where researchers mostly agree on the definition. @federalreserve.gov's Survey of Consumer Finances puts top 0.1% cutoff at $62 million per HOUSEHOLD. But tax-data-based methods split wealth between spouses & calculate per ADULT, leading to different results. 2/

Internationally, the U.S. sits mid-pack among 10 advanced economies on debt-to-wealth, though the ranking doesn't match the usual debt-to-GDP ordering. We at @equitablegrowth.bsky.social will be digging deeper into this comparison — part of a broader research agenda we hope this measure spurs. 5/

Ironically, those low ratios are partly due to rising inequality. Hold the top 0.01%'s wealth share at its 1980 level, before inequality 🚀, and debt-to-top-wealth would be 3x higher today. Inequality drags on growth — but it also expands taxable capacity at the top. 4/

This measure also allows for an easy inequality overlay. The result: the "there's not enough money at the top" refrain doesn't hold up. ~130,000 households hold as much wealth as the entire federal debt. 3/

Debt-to-GDP is stock-to-flow: decades of borrowing over one year's income. Debt-to-wealth is stock-to-stock. Since 1980, U.S. private wealth has grown from ~2.5x GDP to ~4.6x, mostly from rising asset prices. A dollar of debt weighs less now. 2/

U.S. debt held by the public just topped 100% of GDP, and CBO says it'll break the WWII-era record (106%) before 2030. But measure debt against total private wealth instead, and it's only ~half its 1945 peak. A thread on why the yardstick matters. 🧵

The core loophole: The wealthiest Americans hold vast fortunes in the form of unrealized capital gains — wealth that goes untaxed as long as assets are never sold. And thanks to stepped-up basis, much of it escapes taxation entirely at death. h/t @jarobb.bsky.social

The culprit? Decades of tax cuts that disproportionately benefited the wealthy — and are now the primary driver of a national debt reaching 100% of GDP. h/t @bbkogan.bsky.social This isn't a spending problem. It's a revenue problem.

And the tax system has failed to keep up. There's strong evidence it actually turns regressive at the very top — with the richest 400 families paying a lower effective rate than the average middle-class household. h/t @pdriessentax.bsky.social @patrioticmillionaires.org @jeisinger.bsky.social

The problem starts here. Since 1980, the top 1%'s share of U.S. income has surged while the bottom 50%'s has collapsed. This isn't just a moral stain — it's an economic drag that slows growth and hollows out the tax base. h/t @thomaspiketty.bsky.social @gabrielzucman.bsky.social

Large pass-throughs also tend to have very complex ownership structures. Dozens of partnerships are layered on top of one another — obscuring ownership, complicating IRS audits, & facilitating offshore money movement. These are not your local laundromats, beloved diners, or trusty hardware stores.

Despite what you may have heard about pass-throughs being small, mom & pop businesses, the top 1% captures a disproportionate share of all pass-through income. The real beneficiaries: hedge funds, private equity firms, & real estate vehicles.

Buffett owns Berkshire Hathaway — a C corporation that pays corporate tax, pushing his tax rate up. Michael Bloomberg owns Bloomberg LP — a partnership (a "pass-through") that doesnt pay corporate tax, pushing his tax rate down. Same ballpark wealth. Different tax rules & rates.

Reason #3: These rich folks just got another tax cut! The Tax Cuts & Jobs Act of 2017 already led to a big cut for the top. But this year's One Big Beautiful Bill Act not only extended TCJA but further lowered estate tax & provided additional breaks to high-income businesses & investors. END/

Reason #2: The researchers attribute the ENTIRE corporate tax to shareholders. Most analysts assume some of the tax gets paid by workers. Either way, the researchers find the corporate tax is critical for fairly taxing the richest Americans. Their total tax rate would be ≈15% without it.

8) Missed Opportunity on Care Instead of making the investments we know we need in paid leave, child care, and pre-K, the law tweaks a few employer tax credits and modestly and selectively increases the child tax credit, a woefully inadequate response to the care crisis.

5) More Indefensible Tax Giveaways The law doesnt just extend TCJA & doesnt just affect marginal rates. It gifts bunch of other handouts to the rich, including Increase in estate tax exemption Enhanced qualified small business stock exclusion Extension of pass-through deduction

4) Large Tax Cuts for the Wealthy The law uses these savings from Medicaid & SNAP for large tax cuts for the rich, making it the most regressive tax & budget bill in modern history. The average household in top 0.1%, which makes >$2 million/year, gets a $300K+ cut in 2027.

3) Increased Hunger 22 million families will lose some or all of their SNAP benefits as a result of the cuts, which will also have negative downstream consequences on local economies across the US.

2) Backdoor Repeal of the Affordable Care Act It's not just Medicaid that gets hit, but also enhanced premium tax credits that millions of Americans use to gain access to affordable insurance through the state marketplaces.

1) Phony Populism Though "no tax on tips/overtime" got a lot of attention, they are tiny compared to the rest of the law. Plus, they're overly complicated, hard to enforce, will benefit few U.S. workers, and will expire after 2028...

Even before Senate made them worse, OBBBA's Medicaid & SNAP cuts projected to be economic equivalent of losing: 97% of food manufacturing in New Jersey's 7th district (Kean) 85% of farming in NE-2 (Bacon) 69% of hospitality (largest private industry in district!) in CO-3 (Hurd) ...

Eye-popping analysis here! Once Americans learn about the unprecedented regressivity in the reconciliation bill, they oppose 78-11. Even Republicans oppose 61-23 (after initially supporting before learning the distributional effect of the tax & spending cuts).

Note in the graph above the 9.2% on top 400 families & a so-small-it's-hard-to-see 0.5% on Bezos & Buffett. 👀 All of these rates are considerably lower than what many non-rich, wage-earning Americans pay, especially given regressive federal payroll taxes. 5/

We know from @propublica.org @zliscow.bsky.social @gregleiserson.bsky.social @jarobb.bsky.social & others that FEDERAL INCOME tax is major driver of problem. Especially when you (correctly!) count unrealized capital gains (appreciated assets that are big part of fortunes at the top) as income. 4/

For example, Jeff Bezos & Warren Buffett, two of the richest Americans alive, likely pay a total tax rate of 18%. This includes ALL tax: state, federal, & foreign…as well as their share of their companies’ corporate tax. (h/t Emmanuel Saez & @gabrielzucman.bsky.social) 3/

The top 1% get 55% of benefits! So this one wasteful provision will send ≈$400 billion/10yrs to millionaires & billionaires. While at the same time the bill cuts SNAP by 27% to "save" $300b, kicking millions off food stamps so that Mike Bloomberg & friends get a bigger tax cut.

Speaking of cost, Comm for Responsible Federal Budget rightly points out that current price tag of $3+ trillion/10 yrs understates true fiscal risk. By sunsetting various provisions (among other budget gimmicks), this bill sets up ANOTHER fiscal cliff in 4 years. 8/ www.crfb.org/blogs/reconc...