Media Myth Debunked: Millionaires Don't Pay Less Tax as Percent of Income Than Lower Earners
As President Obama trots out his new "Buffett Rule" to raise taxes on millionaires, the media are predictably assisting his efforts by spreading misinformation about the wealthy paying less taxes than lower wage earners as a percent of income.
The chart above is an abbreviated version of the IRS's 2009 Table 1.1 "Selected Income and Tax Items."
Unfortunately, I wasn't able to include in this picture data for folks making under $10,000 due to spacial limitations. For those interested, people making "$1 under $5,000" paid 11.9 percent of taxable income and 4.8 percent of Adjusted Gross Income less deficit. "$5,000 under $10,000" was 10.2 percent and 4.8 percent respectively.
For those wondering what the "less deficit" means, from the research I've done, it appears that for the purposes of these tables, the IRS subtracts AGI losses - those returns that actually showed a loss on line 37 of form 1040 - from all of the gains to give an accurate reading of the AGI in each income bracket.
That said, readers should notice that folks with AGIs and taxable incomes of "$75,000 under $100,000" paid 8.5 percent and 12.3 percent respectively.
Even at the $100,000 under $200,000" level, taxes were 11.9 percent and 16.3 percent respectively.
Yet when you get to $500,000 and over, the numbers jump to as high as 25.8 percent and 29.7 percent respectively.
That certainly isn't what the media are telling you, is it?
To be sure, at the $10 million and over number, taxes drop a bit because these folks clearly make more of their total income in investments than most people. However, even they paid higher percentages than anyone making less than $500,000 AGI or TI.
As such, this idea that millionaires are in general paying less tax percentagewise than - ahem - secretaries has absolutely no basis in fact.
Wouldn't it be nice if so-called journalists actually shared this information with the public rather than the "rich aren't paying their fare share" nonsense we constantly hear and read?
Post facto addendum: The President and his media minions are trying to use Warren Buffett as the icon of wealth to disingenuously paint the picture that most millionaires are making so much money from investing that as a result of the lower tax treatment on such their burdens are less than regular working folks.
The information attained from the IRS should totally debunk this myth, and if we really had any journalists left in this country rather than the shills that dominate the media today, the numbers presented here would be in every newspaper, magazine, and televised newscast in the coming days to tell Americans the truth.
*****Update: The Associated Press did its own fact-checking Tuesday confirming this report. Bravo! Now let's get the rest of the media to follow suit.