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This post argues that the erosion of the corporate income tax (CIT) has quietly removed one of the main fiscal constraints on extreme wealth accumulation in the United States. As we move into 2026, the wealth tax is likely to become a central protagonist in public debate, and it should. But one part of the redistribution story is still underestimated: the broader fiscal architecture that allows extreme fortunes to keep compounding.
In our previous entries on this blog, we documented how wealth concentration has climbed to historic highs. This is no longer best described as a “worrying trend.” It increasingly looks like a durable structural imbalance, with economic and political consequences that extend well beyond questions of fairness.
The scale of modern fortunes is now so large that it stops being merely “private wealth” and starts behaving like a macroeconomic, and even geopolitical, force.
Recent Forbes-based estimates and wealth census data point to a striking fact: the United States now has roughly 920 billionaires, whose combined wealth exceeds $6.7 trillion, about the combined annual GDP of France and the United Kingdom. Put differently, a group small enough to fit inside a single large theatre commands roughly the same economic “weight” as the total production of two advanced economies with more than 140 million people.
The deeper issue is not only the accumulation itself, but the policy and institutional mechanisms that allow it to persist. The figures below break down the composition of the total tax burden in the United States in 2023. The pattern is clear: effective tax rates follow an inverted U-shape across the distribution.
For most Americans, the total tax burden rises gradually with income. But after a point the pattern reverses: effective rates peak and then fall at the very top. In these estimates, the top 0.1% face an effective rate close to 40% of pre-tax income, while the top 0.001%, roughly 1,300 households in today’s U.S. population, face a lower rate of around 30%. (See FRED)
For middle and upper-middle groups, the burden remains high because wages are taxed at source, consumption is taxed continuously, and social contributions are mandatory, so even nominal gains can be partly absorbed by the tax-and-contribution structure.
The composition also matters. Property/wealth taxes and the corporate income tax (CIT) are the most progressive components: they rise meaningfully toward the top and are the main levers that can, in principle, push back against extreme concentration. By contrast, indirect taxes and social contributions tend to weigh more heavily, relative to income, on lower and middle groups, where households rely mainly on wages and consumption rather than capital income and asset gains.
Although the corporate income tax is legally paid by firms, it is economically borne by households that own corporate equity. By reducing after-tax profits, the CIT lowers the income and wealth that can flow to shareholders through dividends, buy backs and capital gains. This is why it appears as part of the effective tax burden of top households figures.
In 1980, the U.S. tax system was far more progressive at the extreme top. In the Piketty–Saez–Zucman (PSZ) series, the top 0.001% (corresponds to roughly 800 households in 1980) faced an effective total tax rate above 50%. (see FRED+1)
What changed? A central shift is the weakened role of the corporate income tax (CIT). In 1980, corporate taxation worked as a “front-end” constraint: it taxed profits before they could be distributed and converted into private fortunes. If we conceptually remove the CIT component from the 1980 picture, the remaining top-end tax burden looks much closer to today’s.
A key reason modern fortunes can grow so fast is that much of the wealth at the top comes as unrealized capital gains, the value of shares rising, rather than wages or cash payouts. This is not a claim that the CIT directly taxes unrealized gains; it is a claim that it taxes the profit stream that is ultimately capitalized into those gains.
The policy mechanism is simple: the top federal corporate rate was 46% in 1980, versus 21% today after the TCJA. With a much lower CIT, the fiscal “anchor” weakens because more profits remain after tax inside the firms. Those after-tax profits can be distributed (dividends), used to repurchase shares (buybacks), or retained and capitalized into higher equity values, all channels through which wealth accumulates at the very top, even when gains are not immediately realized.
This historical comparison is the clearest evidence in the story. Putting the 1980 profile next to the 2023 breakdown, and then looking at the time series for the very top, reveals a simple pattern: corporate taxation used to bite hardest at the extreme top, especially for the top 0.001%, and that bite has steadily weakened.
The corporate income tax (CIT) once acted as a fiscal anchor by taxing profits upstream, before they could accumulate inside firms and be converted into private wealth. This matters even when fortunes largely take the form of unrealized capital gains: equity values reflect claims on expected after-tax profits. The figure makes the point visually. The CIT burden is consistently highest at p99.999 (top 0.001%), and it was substantially larger in the 1980s, with another clear step down after 2018.
This does not end the debate, critics argue that higher CIT can affect investment and employment. But the distributional lesson is hard to ignore: CIT and property/wealth taxes are the instruments most directly tied to the top of the wealth distribution. When they weaken, the tax system becomes less capable of counteracting extreme concentration.
The stakes are not only economic. Extreme wealth is also extreme power. In 1980, reaching the summit meant facing a steeper fiscal slope; today the slope flattens, and at the very top it turns downward. When the largest winners pay proportionally less than households under rising cost-of-living pressure, the social contract frays, and the state’s ability to fund the foundations of prosperity, from education to infrastructure and the rule of law, is put at risk.
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