Posted on 01/19/2012 8:57:01 AM PST by SeekAndFind
Taxes: Mitt Romney's admission that his effective tax rate is around 15% prompted the usual class warfare rage from the left. But it also prompted news reports to repeat several myths about the country's income tax code.
As CNN put it in the first paragraph of its story, Romney's 15% tax rate means "the multimillionaire pays a smaller percentage of taxes on his income than many middle-income Americans."
This is a favorite canard of the left these days - that the super-rich often pay taxes at lower rates than do struggling middle-class families.
It was propelled by Warren Buffett, who claimed that his tax rate was lower than his secretary's, prompting President Obama to quickly propose a "Buffett rule" surtax on millionaires.
But like many "facts" about the tax code, this one evaporates upon closer inspection.
First, it's simply false that Romney's tax rate is lower than "many middle-income Americans." The middle 20% of income earners pay taxes at an average rate of just 2.3%. The next highest 20% pay at an average rate of only 6.1%.
Even when you include payroll taxes, the effective rate for families in the middle of the income spectrum is less than 13%, according to data from the Tax Policy Center.
IRS data, meanwhile, show that families with incomes of between $50,000 and $100,000 paid an average 8.9% in income taxes, while those earning between $100,000 and $200,000 paid an average 12.7%.
So where are all these overtaxed middle-class families the media keep talking about?
This fixation on tax rates also overlooks the fact that the wealthy pay the vast bulk of all federal income taxes. In fact, the top 10% of income earners pick up 70% of all federal income taxes paid, and the richest 1% account for more than a third.
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PLEASE NOTE:
1) Almost HALF of families in America don’t owe any income tax at all - or get money back from the federal government.
2) Romney’s rate - as well as Warren Buffett’s-is lower than the average for the richest 1% (which according to the IRS was 24% in 2009). But even this figure is misleading because it doesn’t factor in the hidden double taxation on his income.
Most of Romney’s income is from investments, not wages (Romney is not employed at this time ), which are taxed at a fixed rate. But before they see any of this income, it’s already been taxed at the corporate level, at a much higher 35% rate, which means companies have that much less to distribute to shareholders.
3) Same is true for capital gains, with the added problem that the gains aren’t indexed for inflation. So if an investor sells a share he’s held for many years, he can pay taxes on a capital gain that is, in real terms, zero or even negative.
This double taxation of investment income poses a serious handicap to economic growth, which is why most advanced economies have tried to minimize it.
Everyone should have to pay 10% and no more.
Hidden offshore (Cayman Island) tax dodging accounts full of tens of millions along with practicing vulture capitalism in SOME instances at Bain DOES NOT look good for Taxachusetts ex-Gov Willard the Mandator at all!
Hidden offshore (Cayman Island) tax dodging accounts full of tens of millions along with practicing vulture capitalism in SOME instances at Bain DOES NOT look good for Taxachusetts ex-Gov Willard the Mandator at all!
That is only true for middle class families. Many singles with a upper middle income pay more than 15%.
The GOP candidates need to stand up and explain this issue, rather than just responding to the bad numbers qouted. The press just keep misleading people who are dumb enough to believe them.
The same issue comes up discussing the CA state tax. If the press really gave some accurate examples their claims of unfairness would evaporate. If you add in earned income tax credits..in addition to those who pay no tax..the situation is even more clear.
15% is faaar better than Jeffery Imelt’s G.E. at 0%
We pay 28% plus all the other taxes. I thought upper income pay that much? What am I missing?
The news media does not report the true story, unless of course it’s bad news about a conservative, and they get stuck on one theme and keep pounding, just like the recent payroll tax cut which was really a social security tax cut. It was a payroll tax cut but not an accurate accounting. Like the old journalistic anthem goes, if the truth is less exciting than the lie, then print the lie (paraphrasing).
What's missing from the story is the concept of taxable versus non-taxable income or wealth. For example, if you work for a living and earn $100K per year you would pay approx $20k in taxes. However, if I was a trust fund baby that earned $100k per year in interest on tax free bonds I would pay $0 in taxes (ignoring AMT). Same $100k lifestyle, different outcome. As a liberal hypocrite I would also say that the $20k you pay is not enough...
If I pay 28% that means I pay 28,000 not 20,000. We pay over 50% of our income after everything.
So where are all these overtaxed middle-class families the media keep talking about?Are you suggesting that we're not paying enough in taxes?
“If I pay 28% that means I pay 28,000 not 20,000. We pay over 50% of our income after everything.”
If you earn $100,000, you probably don’t pay $28,000 in federal income tax.
Your tax is based on your TAXABLE income, which is smaller than your salary because of deductions and exemptions. And you don’t pay 28% on your whole taxable income, you pay a smaller percentage on part of it, and 28% only on the portion above a threshold. (The threshold depends on your filing status.) And then you might qualify for some tax credits which reduce the amount you pay even more.
Accounting for all of those things puts many middle-class people in the range of 5-15% for their overall federal income tax rate.
My husband and I grew up poor, terribly poor. He went into the Navy and we got married after high school. After 6 years of military service we moved home. He worked full time went to school full time, using the GI bill to go to school. Some off his friends would get on him for not partying with them. He finished his bachelor degree but could not get anymore gi benefits. When his grandmother died she left him $6000. Other people would have misused that money, but he did not. He used the money to get his masters degree. We had to put 3 boys through college and wasn't able to save much money. All our life money was tight and now that we finally are making a decent income obama wants to take it away and give it to people won't work. When I say that I mean that because we know a lot of people who live off the government and pretend to look for work. Some claim disability, but can play sports. We are not rich, but I'm tired of seeing people who do nothing to help themselves get freebies. A girl I worked with had 3 kids, 3 different dads, on food stamps, sub housing....had the money to go on a cruise every other year. We had to camp out in the mountains. She had a new car and we kept ours for years. Our house is nothing fancy, but we are blessed to have it. I believe we should help those who truly can't work, the elderly, the truly disabled....we should help people for a short time if hard times hits and until they can get on there feet. But we see generational addiction to government handouts. Why work when you can watch jersey...the kardishan???...ophra. The bible says, If someone does not work, they should not eat. A little hunger might get some of these people back to work, and we remember what it is like to be hungry.
Sorry Jordo, I meant to send this to this guy,
What’s missing from the story is the concept of taxable versus non-taxable income or wealth. For example, if you work for a living and earn $100K per year you would pay approx $20k in taxes. However, if I was a trust fund baby that earned $100k per year in interest on tax free bonds I would pay $0 in taxes (ignoring AMT). Same $100k lifestyle, different outcome. As a liberal hypocrite I would also say that the $20k you pay is not enough
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