Despite being the nation’s first Republican president, Abraham Lincoln created the first income tax in 1861 to fund the Union side of the Civil War: a flat tax of 3% on incomes over $800. It was later amended in 1862 to a 3% tax on incomes between $600 and $10,000 and 5% above $10,000 as the Civil War dragged on. It was later rescinded in 1872 due to public outcry.The US system has been historically successful for the most part, because its cultural societal roots and governmental structure are founded in t ...

Core Insights - The United States has approximately 900 billionaires, with their total wealth reaching a record $7.6 trillion as of Labor Day 2025, more than doubling in less than eight years [1] Taxation of Billionaires - Billionaires benefit from tax laws that allow them to retain a larger percentage of their wealth, regardless of whether they reside in low or high tax states [2] - The effective tax rate for billionaires is significantly lower than that of ordinary wage earners, primarily due to their income sources such as capital gains and dividends, which are taxed at lower rates [4] - In contrast, average workers, like those in New York, pay taxes mainly on wages, facing higher marginal tax rates along with various other taxes [5] Comparative Tax Rates - Billionaires typically pay an effective tax rate ranging from 8% to 15%, while the average New Yorker pays around 25% to 30% when all taxes are considered [6] - Historical data indicates that the wealthiest 400 families had an average federal income tax rate of 8.2% from 2010 to 2018, which is significantly lower than the average American taxpayer's rate [6] - An analysis of the 25 richest Americans revealed a combined federal income tax payment of $13.6 billion, resulting in a "true tax rate" of about 3.4% [6] - A report analyzing 26 top billionaires showed an average effective tax rate of 4.8% over six years, with some individuals, like Warren Buffett and Jeff Bezos, paying rates as low as 0.1% and 1.1%, respectively [6]