Plain English with Derek Thompson America's Tax System Is Broken
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Mar 24, 2026 
Gabriel Zucman, an economist who studies tax inequality and billionaire wealth, digs into why the ultra-rich often pay lower rates than workers. He gets into legal tax avoidance, the long decline of corporate and estate taxes, why wealth taxes have stumbled, and why AI could supercharge wealth concentration worldwide.
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How America Stopped Taxing The Super Rich
- Super-rich tax rates were far higher in the mid-20th century and fell mainly because corporate and estate taxes weakened.
- Zucman says effective billionaire rates dropped from roughly 60–70% in the 1950s to about 23–24% today as corporate taxes and estate-tax enforcement declined.
Why The Income Tax Becomes Optional For Billionaires
- Zucman argues the real tax failure appears at the billionaire level because income tax becomes optional for people living off ownership stakes.
- They can avoid taxable income by taking low salaries, not issuing dividends, and not selling shares, unlike wage earners who must report income yearly.
The Main Billionaire Tax Loophole Is Legal
- Billionaires' low tax bills mostly come from legal design, not exotic illegality or gray-zone tax tricks.
- Zucman uses Jeff Bezos as the example: if Amazon profits stay inside the company and Bezos sells no shares, his taxable income can be near zero.