I Asked ChatGPT What Would Happen If the Middle Class Paid Taxes at the Same Rate as Billionaires
Written by
Josephine Nesbit
Edited by
Rebekah Evans
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A common claim is that the super-rich don’t pay their fair share in taxes. Defining “fair share,” though, isn’t simple.
Billionaires often pay a smaller share of their total income in taxes, largely because much of their wealth comes from investments taxed at lower rates. But what would happen if both groups paid taxes at the same rate?
To dig into the question, ChatGPT was asked what might happen if the middle class paid taxes at the same effective rate as billionaires — below is what it said.
What Does ‘Same Rate’ Mean?
ChatGPT first pointed out that “same rate” can mean very different things depending on whether you look at statutory tax brackets, effective tax rates after deductions and loopholes or the mix of federal, state and local taxes being counted.
Billionaires’ effective tax rate — the share of income they actually pay — is often far below the top statutory income tax bracket. For example, the National Bureau of Economic Research (NBER) found that the 400 wealthiest families paid an average 23.8% effective tax rate from 2018 to 2020 and the IRS/UC Berkeley paper showed that when you include corporate, estate, gift, payroll and other taxes, the effective tax burden of top wealth groups still remains well below the average.
By contrast, middle-class households often face an effective tax rate of about 26% once income, payroll and state/local taxes are combined, according to the Institute on Taxation and Economic Policy (ITEP).
Impact on Middle-Class Families
If middle-class households were taxed at the same effective rate as billionaires, ChatGPT said that their take-home pay would certainly rise.
According to the artificial intelligence (AI) chatbot, a household earning around $70,000 a year, currently paying roughly 26% of its income in combined federal, state and local taxes, based on data from ITEP, would see its tax burden drop to about 23.8%, the level estimated for the wealthiest 400 families by the NBER. This would mean keeping an additional $1,500 to $2,000 per year, ChatGPT calculated.
Impact on Federal Revenue
ChatGPT’s analysis suggested that while the middle class would get to keep some of their hard-earned cash, lowering their tax rates to billionaire levels would come at a cost to federal revenue.
According to ChatGPT, the federal government would see a decline in tax revenue that funds programs such as Social Security and Medicare, which could result in a loss of hundreds of billions of dollars over time.
That revenue loss would threaten the solvency of Social Security and Medicare, programs already facing long-term shortfalls. Unless those lost revenues were replaced through higher taxes on the wealthy, expanded corporate taxes or new tax structures, ChatGPT pointed out that the government would face growing budget deficits.
