ProPublica\u0026#039;s latest exposé of inequitable taxation\u0026nbsp;shows that the 400 most lavishly paid people in the U.S. don\u0026#039;t pay the highest income tax rates—a finding that progressives say demonstrates the need to overhaul the nation\u0026#039;s tax code and make the ultra-wealthy pay their fair share.\r\n\r\n\u0022Because our tax code favors wealth over work, billionaire money managers can pay lower rates than affluent doctors, lawyers, and manufacturers.\u0022\r\n\r\n\u0022In theory, our tax system is designed to tax the rich at higher rates than everyone else,\u0022 ProPublica noted Wednesday. \u0022That\u0026#039;s not the way it works at the loftiest incomes.\u0022\r\n\r\n\u0022The data reveals a system where the very highest earners, on average, pay far lower tax rates than the merely affluent do,\u0022 the news outlet reported. \u0022And even among the top 400, some groups have it better than others: Tech billionaires pay rates well below even other business owners.\u0022\r\n\r\nA cache\u0026nbsp;of Internal Revenue Service (IRS) data obtained last year by the nonprofit newsroom revealed which 400 people in the U.S. had the highest incomes from 2013 to 2018. Ten of the top 15 were tech billionaires whose income usually came from selling stock. Hedge fund managers made up a fifth of the top 400, while the founders and executives of private equity firms and the heirs to massive fortunes were also well represented.\r\n\r\nCracking the list required an average income of $110 million per year—orders of magnitude higher than the annual earnings of members of the top 5% (at least $198,000)\u0026nbsp;and the top 1% (at least $485,000).\r\n\r\nA typical American who makes $40,000 annually would have to work for 2,750 years to bring in what the lowest-earning member of the top 400 made in one. Meanwhile, each of the top 11 had an average yearly income of more than $1 billion—a sum it would take a typical American 25,000 years to amass.\r\n\r\nAnd yet, these 400 people who raked in at least $110 million per year tended to pay\u0026nbsp;federal income taxes at a lower rate than other millionaires. On average, the top 400 paid an effective income tax rate of 22% from 2013 to 2018—just slightly higher than people who earned $200,000 to $500,000 per year.\r\n\r\n\r\n\r\nThat\u0026#039;s because \u0022in the American system, there\u0026#039;s a huge difference between how we tax\u0026nbsp;wages\u0026nbsp;and how we tax\u0026nbsp;investments,\u0022 ProPublica explained. \u0022Income from financial assets is generally taxed at a lower rate.\u0022\r\n\r\n\u0022On average, the rate of income tax that people pay does climb as incomes ascend into the top 1%, but when you get to the range of $2 million to $5 million, that trend stops,\u0022 the news outlet reported. \u0022The group earning in this range, composed mostly of business owners and workers with extremely high salaries, paid an average income tax rate of 29% from 2013 to 2018. After that, average tax rates actually drop the further up in income you go.\u0022\r\n\r\nFrank Clemente, executive director of Americans for Tax Fairness, wrote on social media that \u0022because our tax code favors wealth over work, billionaire money managers can pay lower rates than affluent doctors, lawyers, and manufacturers.\u0022\r\n\r\nAccording to ProPublica, \u0022Many of the top 400 hit the sweet spot of high incomes and low taxes on much of that income...\u0026nbsp;Their income mostly stems from stock sales taxed at the lower rate. Since 2013, that long-term capital gains rate has been 20%, about half the top rate on ordinary income (37% in 2018).\u0022\r\n\r\nThe news outlet added:\r\n\r\n\r\nTaxing long-term capital gains at lower rates than income is not new. The U.S. has done so for most of the past century. But in 2003, under President George W. Bush, that special rate was extended to most stock dividends, or money paid out to owners of a company\u0026#039;s stock, for the first time in U.S. history.\r\n\r\nThat change particularly benefited the wealthy. Together, the top 400 saved an average of $1.9 billion in taxes each year—due solely to the lower rate on dividends.\r\n\r\n\r\nIn addition to benefiting from a lower tax rate on investment income, the super-rich often reduce their taxable income through major deductions.\u0026nbsp;\r\n\r\nFor example, tech billionaires \u0022often made large charitable donations from their stock holdings,\u0022 ProPublica reported. \u0022A generous provision of the tax code allows them to deduct the full value of the stock at its current price—without having to sell it and pay capital gains tax.\u0022\r\n\r\nSeveral billionaires are so adept at using financial accounting tricks to slash their taxable income that they weren\u0026#039;t included on the list of top 400 highest earners.\r\n\r\n\u0022Some, especially in real estate and oil and gas,\u0026nbsp;use write-offs\u0026nbsp;to erase taxable income,\u0022 ProPublica noted. Others, such as Warren Buffett—the fifth-richest person in the world with an estimated net worth of $118 billion but whose annual income is $27 million—\u0022simply avoid income\u0026nbsp;even as their wealth rises. Billionaires often use the \u0022Buy, Borrow, Die\u0022\u0026nbsp;method: They borrow against their wealth to avoid taxes, then their estates are able to skirt taxes after their deaths.\u0022\r\n\r\nAs the report makes clear, multimillionaires generally pay higher income tax rates than ordinary working people in the U.S. However,\u0026nbsp;most workers pay more in payroll taxes—Social Security and Medicare contributions automatically deducted from each paycheck—than income taxes.\r\n\r\nBecause wages constitute a small share of their total income, wealthy people tend to pay relatively little in payroll taxes.\u0026nbsp;Low- and middle-income workers, by contrast, are hit disproportionately hard by them.\r\n\r\nAs a result, payroll taxes \u0022can wipe out the progressivity of income taxes,\u0022 ProPublica pointed out. \u0022It\u0026#039;s common for wage earners to pay a higher rate of personal federal taxes than even the highest-earning Americans.\u0022\r\n\r\n\u0022As we showed last year, the richest avoid income when they can,\u0022\u0026nbsp;ProPublica reported. \u0022Then they pay very little in tax when it\u0026#039;s measured against their growing wealth. The top 25 wealthiest Americans got $401 billion richer from 2014 to 2018, but paid just $13.6 billion in federal income taxes,\u0026nbsp;a \u0022true tax rate,\u0022 as we called it, of 3.4%. Even the conventional income tax rate for this top 25 is remarkably low: 16%.\u0022\r\n\r\nPatriotic Millionaires—a network of wealthy Americans advocating for raising taxes on the members of their class, especially the few dozen who have catapulted to a stratosphere by themselves—responded to the report by saying that \u0022it\u0026#039;s time to tax billionaires.\u0022\r\n\r\n\r\n\r\nPresident Joe Biden recently\u0026nbsp;proposed\u0026nbsp;a 20% minimum tax rate on all U.S. households worth more than $100 million—projected to raise approximately $360 billion over a decade if enacted. However, right-wing Democratic Sen. Joe Manchin (W.Va.) has already expressed his\u0026nbsp;opposition\u0026nbsp;to the measure, which is also highly unlikely to garner the support of congressional Republicans.