Media Myth Debunked: 97 Percent of Americans Pay Less Tax Than Romney's 15 Percent
By Noel Sheppard | January 19, 2012 | 09:24
In the days following Presidential candidate Mitt Romney's admission that he pays around 15 percent in federal income taxes, the Obama-loving media have been in a full-court press claiming this is less than what most Americans pay.
According to last year's report from the Internal Revenue Service, as a function of Adjusted Gross Income, 97 percent of 2009 filers paid less than 15 percent:
This first chart shows the breakdown of all 140 million filers in 2009 and what their percentage tax was by income:
As you can see in the fourth column, folks making "$100,000 under $200,000" paid tax at an average of 11.9 percent of their AGI. Those making under that paid even less.
It's not until you get to $200,000 and above that anyone paid over 15 percent; "$200,000 under $500,000" paid 19.6 percent.
This next chart shows the number and percentage of tax returns filed at each income level:
If you add up all the percentages in the third column ending with "100,000 under $200,000," you get 97 percent.
That means as a function of AGI - which is typically how folks look at taxes - if Romney pays 15 percent as he stated, he's paying a higher rate than 97 percent of his fellow citizens.
This is a far cry from what media representatives have been saying since his admission.
Even measuring this by taxable income, Romney is still paying more than 87 percent of filers.
Something else to consider is the highlighted line in the first chart that shows the average filer in 2009 paid 12.8 percent of AGI.
So when Obama's sycophants including billionaire Warren Buffett carp and whine about Wall Streeters only paying 15 percent, remember that this is more than the tax burden of almost all Americans.
Associate Editor’s note: Speaking of tax burdens, here's a way to lower yours. As you are likely aware, since the financial collapse of 2008, charities and non-profit organizations have seen a sharp reduction in donations. Although the environment has improved, contributions are still nowhere near where they were prior to the recession. Unfortunately, the Media Research Center has not been immune. With this in mind, your support has become more important than ever. With a critical election approaching, the liberal media needs to be monitored 24/7. As we have been predicting for months, the press are willing to do anything to get their beloved politicians elected and/or reelected. As such, we need your help to fight this fight. Any contribution, even $10, is greatly appreciated. Please consider a tax-deductible gift to the Media Research Center to help us battle the liberal media. Thank you.
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Comments
Breaking news
Submitted by KornKing on Thu, 01/19/2012 - 9:41am.
Lapdogs won't let the facts get in the way of the storyline
Plus, ...
Submitted by Newsbubba on Thu, 01/19/2012 - 10:17am.
... the taxes that are paid For them before they even get the "unearned income" from their stock holdings.
If you own stock in a corporation, you have a share of ownership in that company, so when the corporation pays its taxes from the money they make, they are paying out part of your money in taxes.
That is money that you will never receive, plus you have to pay MORE tax on the part that you do, which has already been reduced by taxes.
Democrats can kiss my tax-paying a$$.
I don't think the issue is
Submitted by cathartic1 on Thu, 01/19/2012 - 10:18am.
I don't think the issue is that he pays so low in taxes, but the fact that he pays so low in taxes for unearned income - he admits he gets most of his money from investments. I get a bonus every year from my company - how come that gets taxed 30%, and yet his only gets takex half of that?
Because a bonus is considered
Submitted by Scuba Dude on Thu, 01/19/2012 - 10:30am.
Because a bonus is considered earned income. Did you not know that?
Edit: Here is a link to the IRS: (emphasis mine)
. Wages and Other Compensation
Wages subject to federal employment taxes generally include all pay you give to an employee for services performed. The pay may be in cash or in other forms. It includes salaries, vacation allowances, bonuses, commissions, and fringe benefits. It does not matter how you measure or make the payments. Amounts an employer pays as a bonus for signing or ratifying a contract in connection with the establishment of an employer-employee relationship and an amount paid to an employee for cancellation of an employment contract and relinquishment of contract rights are wages subject to social security, Medicare, and federal unemployment taxes and income tax withholding. Also, compensation paid to a former employee for services performed while still employed is wages subject to employment taxes.
Because your bonus
Submitted by bkeyser on Thu, 01/19/2012 - 10:31am.
isn't an investment you made. It's not an investment your company made either, it's payroll. The reason for the low capital gains tax on investments is to spur private investment. If the Feds want to raise the capital gains tax, they'll see a proportional decrease in private investment. That's simple math. Less private investment means less business growth which means less new hires. It's like taxing charitable contributions- you'll see a drop equal to the tax in decreased donations.
And why would a return on a investment be "unearned" income? That's an unfair characterization.
tax answers for T. Geithner
Submitted by CarlosS on Thu, 01/19/2012 - 10:35am.
Bonuses are taxed as ordinary income, withholding is 28%, the actual tax you pay depends on your individual tax bracket. Long term capital gains tax is 15% for everybody, including Warren Buffet, Mitt Romney, you and me
Admittedly not the best
Submitted by cathartic1 on Thu, 01/19/2012 - 10:40am.
Admittedly not the best example, but the argument about comparing people who get taxed for labor and people who get taxed for simply investing (and making a greater profit) seems like apples and oranges.
The car tick 1diot speaks again.
Submitted by The Vet on Fri, 01/20/2012 - 12:52am.
There is a reason capital income and capital gains taxed at a lower rate. Something that completely eludes idiots like cartick1.
1. The money you invest has already been taxed once when you received it the first time. Either as income or a previous capital gain.
2. The companies you invest in pay the tax on the money they earn.
3. That money paid out in dividends is again taxed when you receive it.
4. Capital gains are taxed at a lower rate to encourage you to turn around and reinvest that money. An insanely high tax rate discourages investment. Who will risk their money when most of the profit goes to the government yet government shares in almost none of the loss?
Idiot.
A BONUS, you must be a one percent-er...,
Submitted by CarlosS on Thu, 01/19/2012 - 10:42am.
capitalist corporate raider to be getting bonuses every year while all of us average Joe's are living on unemployment and food stamps! (humor off)
Nope, lowly employee in
Submitted by cathartic1 on Thu, 01/19/2012 - 10:43am.
Nope, lowly employee in medical software. Business is booming for some strange reason...
Me, too...,
Submitted by CarlosS on Thu, 01/19/2012 - 10:47am.
it was just internet humor :-) Actually, my employer gives me my bonuses into my 401K..., of course I'm old, so I appreciate that
Bonuses Can Have Higher Withholding
Submitted by Kingfish17 on Thu, 01/19/2012 - 12:12pm.
Many companies withhold more from bonuses than they withhold from normal income. Your withholding on your regular salary is largely controlled by you, and the number of dependencies you claim. If you withhold too little, however, you may have to pay a penalty when you file your taxes.
Bonuses are often treated differently by an employer, and many automatically withhold 25%, and sometimes even more, if you receive significant bonuses.
And as you stated earlier, comparing "income" tax and "capital gains" tax are entirely two different things, but the press lumps them together to mislead the uneducated masses in any and all attempts to smear conservatives.
Since you work for a living, cathartic, and you appear to do rather well, it would behoove you to educate yourself in areas concerning taxes, investments, and withholding.
A bonus is no different than
Submitted by Smartypants on Thu, 01/19/2012 - 4:32pm.
A bonus is no different than just another pay check. It is not investment income.
the media lies
Submitted by ohio granny on Thu, 01/19/2012 - 10:36am.
the media lies about republicans - who would've thunk it? Most people don't know the difference between earned income, unearned income, and bonuses? The media conflates all to confuse the uneducated? Color me not surprised.
Speaking Truth to facts
Submitted by Galvanic on Thu, 01/19/2012 - 10:38am.
No doubt the MSM won't let the facts get in the way of their "narrative." Afterall, they speak Truth to facts.
The pundits on MSNBC and CNN will certainly point to payroll "taxes" (Social Security and Medicare) as being excluded from data, but that skirts the issue of Federal income tax rates. The fact is that nearly half of all tax filers pay no Federal income tax at all, and some of the more outspoken Leftists owe taxes, like Al Shaprton owing $1.6 million.
This makes Romney a 99%er?
Submitted by shirtsbyeric on Thu, 01/19/2012 - 10:38am.
This makes Romney a 99%er?
As Gomer Pyle used to say....
Submitted by c5then on Thu, 01/19/2012 - 10:47am.
Well surprize, surprize surprize....
There is a reason that wealthy individuals and CEOs structure their pay so that a small portion is "wages, salaries, tips" and the rest is in stock options, and perks. Warren Buffet may "make" a certain amount of money each year, but it's not in the form of a salary, it's in the form of stock options in Berkshire-Hathaway. He simply sells some old stock (held over 12 months) equal to what he "needs" that year and it is taxed at the capital gain rate of 15%.
Bill Gates takes a salary from Microsoft of less than $200,000 a year. Want to know why? Look at the first table and notice the jump in tax rate from the $100k - $200K group and the next higher one.
The next time Buffet or anyone else brings it up he needs to get asked why he is punishing his secretary by giving her a salary and not compensating her with options like he gets.
All this crap goes away with a flat tax. A progressive income tax is unethical and inefficient because it punishes success and rewards sloth.
Part time Congress with term limits! - No more professional politicians. Let's start rebuilding the Republic!
Tax Treatment of Options and Restricted Stock
Submitted by Kingfish17 on Thu, 01/19/2012 - 12:29pm.
Yes, Warren Buffet, should he desire come cash, could indeed sell shares of stock that he owns and pay 15% capital gains tax on any profit he makes. But you have left out the entire discussion regarding "income" tax on the options he was granted.
If Buffet was granted stock options, in the form of deferred compensation, when he exercises those options, he still must pay income tax on the original value of the options. Options and deferred restricted stock are not free from income tax. Buffet "earned" income that paid for those options. When he exercises the options, he owes income tax on what he earned.
When a corporation gives an employee restricted stock or options, it's very similar to giving them cash. The major difference is usually the deferral of paying any income tax on the stock or options that was "earned", until the employee takes ownership of the stock, or exercises the options.
A flat tax still doesn't solve the "problem" of taxing capital at a different rate then income. Mr. Sheppard points out in his article that 97% of people who file already pay less then the long-term capital gains tax of 15%. How would a flat tax solve the dishonesty of the MSM?
The Lefties will retort that
Submitted by trak65 on Thu, 01/19/2012 - 12:37pm.
The Lefties will retort that this analysis only counts INCOME tax and that the numbers change significantly if you factor in social security, SSI, etc., where the wage-earner pays 7.65% on income up to about $106K. With employer matching, this is another 15.3% of income. However, this revenue funds three programs that are basically insurance plans -- for retirement, disability, and survivor benefits (paying your surviving dependents after you die). These programs are not adequately funded by the 15.3% tax -- especially at the lower income levels. I always counter, therefore, that it is not fair to count social security taxes when comparing taxation rates because social security represents payments for which most payors will get benefits that exceed the value of what they're paying in.
Didn't the Bush
Submitted by killa37 on Thu, 01/19/2012 - 1:09pm.
Didn't the Bush Administration REDUCE the capital gains tax??? So, in some convoluted way, this whole scenario could be used as another reason to BLAME BUSH!!! I don't think too many rich libs and trust-funders where griping when the capital gains tax was lowered...................although they are sure going to play it up with regards to Romney. I've just read about his off-shore holdings, so that's going to be headline news as well. He'll be the only guy who's EVER had offshore holdings, according to the MSM..........there will be no mention of anyone else who does it. Plus, you KNOW that Boy Barry wants to go after these offshore holdings - it's money that he needs.
Yes, he lowered capital gains
Submitted by Smartypants on Thu, 01/19/2012 - 4:38pm.
Yes, he lowered capital gains taxes, and the stock market almost immediately started rallying as a result. Of course, everything is Bush's fault. We all know that. The fact the Dems could have done whatever they wanted with tax rates, including capital gains taxes, during the 2 years they ran the entire government matters not in the least. The fact they renewed ALL of the Bush tax cuts when they were set to expire matters not in the least. The fact that Obama and the Dems passed a massive healthcare bill that will only compromise quality of care while adding even more to the national debt matters not in the least. Bush ruined the country and that's all that matters.
The media manipulates
Submitted by Smartypants on Thu, 01/19/2012 - 4:37pm.
The media manipulates everything to do with taxes, just as it manipulates the news in general. Limbaugh played a clip of Diane Sawyer yesterday going gaga over the fact that Newt made about $380K from speeches last year (or something like that). She actually had the nerve to say, "Three hundred eighty thousand dollars! Wow!" The implication is clear--another rich Republican raking in the bucks. Of course, what Newt earns in speeches pales in comparison to Bill Clinton and other prominent liberals, but that is beside the point. Wealth and income only matter when a Republican is involved.
Rush went on to point out that an online website estimates Diane Sawyer's net worth at about $40M, and how much do you think she makes to give a speech?