False claims tax patience
Coeur d'Alene Press | UPDATED 13 years, 6 months AGO
It isn't the wealthiest Americans who need to be defended in the argument for higher taxes.
It's the truth.
When President Obama suggests many secretaries pay higher taxes than do their millionaire bosses, outrage is an acceptable reaction. What isn't acceptable is that the statement is false or at best, misleading.
We quote the president from comments he made last week:
"Middle-class families shouldn't pay higher taxes than millionaires and billionaires. That's pretty straightforward. It's hard to argue against that." He invoked "The Buffett rule," which states: "People making more than $1 million a year should not pay a smaller share of their income in taxes than middle-class families pay."
Who could disagree with that? The problem is, the president is painting a misleading picture.
According to data gathered by The Associated Press from private and government sources, the wealthiest Americans carry by far the heaviest portion of the federal tax load. Not only is the tax rate higher for them; so is the overall hunk of taxes collected from them as a group.
The AP analysis found that:
n It's true some millionaires get off easy. In 2009, Internal Revenue Service data shows, 1,470 U.S. households earning more than $1 million paid no federal income tax. However, that's less than 1 percent of the total - almost 237,000 tax returns were filed by households earning more than $1 million that year. On average, taxpayers who made $1 million or more in 2009 paid 24.4 percent of their income in federal income taxes, according to the IRS.
n This year, according to the Washington-based Tax Policy Center:
* Households making more than $1 million will pay 29.1 percent, on average, in federal taxes (includes income taxes and payroll taxes).
* Households making $50,000 to $75,000 will pay an average of 15 percent of their income in federal taxes.
* Households making $40,000 to $50,000 will pay an average of 12.5 percent of their income in federal taxes.
* Households making $20,000 to $30,000 will average 5.7 percent in federal taxes.
What can muddy the waters somewhat is that investment income is often taxed at a lower percentage than is work income. The highest tax rate for capital gains and dividends is 15 percent; income from wages can go as high as 35 percent.
Because the tax code offers more than $1 trillion in credits, exemptions and deductions, a more accurate way of painting the tax-burden picture would be this: The federal tax structure can benefit people at virtually every income level.
But don't kid yourself or us, Mr. President. As a general rule, those who earn the highest wages pay the most taxes.