At least 90 Percent of Americans Have a Lower Income Tax Rate than Romney

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Obama's class warfare is incredibly bad for the country and just plain wrong. Eat the rich!

 With the Bush tax cuts to sunset on January 1 and with the presidential election in full blown rage, there are so many lies, er, I mean, misunderstandings emanating from various political factions that it is absolutely annoying.

The press by and large seems to report, without comment, things President Obama says. Obama is a shameless class warfare, brass-knuckled Chicago politician.

For more reasonable analysis of, say, taxes, I go to the Tax Foundation, a non-partisan, non-profit tax watchdog established in 1937. The Foundation’s only “bias” is this: “The mission of the Tax Foundation is to educate taxpayers about sound tax policy and the size of the tax burden borne by Americans at all levels of government. From its founding in 1937, the Tax Foundation has been grounded in the belief that the dissemination of basic information about government finance is the foundation of sound policy in a free society.” That is its mission statement on its website.

 Here is an interesting blog post by William McBride, the Foundation’s chief economist. The Foundation’s blog is excellent. Here is his post:

At least 90 Percent of Americans Have a Lower Income Tax Rate than Romney

August 17, 2012

By William McBride

Scott Hodge mentioned something earlier today that might seem hard to believe, especially for readers of the Washington Post: “about 96 percent of all taxpayers have a lower average tax rate than Romney”. More precisely, in 2010, somewhere between 90 and 95 percent of Americans had a lower effective income tax rate than Romney’s 13.9 percent. In 2011, somewhere between 95 and 97 percent of Americans had a lower effective income tax rate than Romney’s 15.4 percent, at least according to the latest IRS data from 2010.

The table and chart below shows the latest IRS data on filers and their effective income tax rates. In total, there were about 143 million filers in 2010. Adding the 13 million non-filers, as estimated by Emmanual Saez, brings the total “tax unit” population to about 156 million.

More than 58 million filers were nonpayers, i.e. they had zero or negative federal income tax liability. Therefore, including the non-filers, more than 71 million Americans paid no federal income taxes in 2010, representing about 46 percent of the population.

Another 27 million, or 17 percent of the population, had an effective income tax rate of between zero and 5 percent. Over 89 percent of Americans had an effective income tax rate of less than 12 percent, 95 percent had a tax rate of less than 15 percent, and fully 97 percent of Americans had a tax rate of less than 17 percent. Therefore, the vast majority of Americans pay less than Romney’s 2010 rate of 13.9 percent or his 2011 rate of 15.4 percent.

 

Discuss this Blog Entry 3

on Aug 31, 2012

Romney 2012

on Sep 11, 2012

This article is hilarious. The question is whether Romney pays a fair tax rate. To answer that question, you can't compare him to the average American. You need to compare him to other high income Americans.

Of course most Americans pay a lower tax rate than Romney. Romney makes $20M/year while 93% of Americans make less than $100K/year (source: US Census Bureau 2010).

There are maybe 8,000 Americans who make more than $10M/year. Yet (using the numbers in your article), there are nearly 8 million "tax units" that pay a higher income tax rate than Romney. So when you compare Romney to people who make $100K+ per year, Romney pays a lower tax rate than 99.9% of his peer group. Sound fair to you?

Why can't you just admit that it is a ridiculous loophole in the tax code that allows Romney (and a relatively few others) to pay a lower tax rate than the rest of us, and that this is something that should be fixed? Don't worry, admitting to this will not turn you into a socialist.

By the way, I do have to thank you for one thing, David. The next time I hear a conservative complain that taxes are too high and need to be cut further, I will just point him to your article as evidence that tax rates are already extremely low.

on Nov 10, 2012

The decision to continually limit this discussion of the taxation of one's income due soley to "Federal" income tax is very misleading.
I would love to be able to skip payroll taxes (there it is....the problem word, payroll). And, here's the rebuttal, "But payroll taxes are not INCOME taxes". You are correct; they are not income taxes as named.
Just for fun, let's not name taxes that will reduce our compensation for our work. And, just for fun, let's say that we could have the choice to tell our employers that we choose to have our compensation characterized as "long term capital gains". Nope, can't do it. Just a few people get to do this. Wow...who made that decision for such a small number of contributors, oops, I mean individuals.
For now, let's not challenge the Romneys of the world.
Let's take the example of an investment advisor or stockbroker. They, too, get up and put their suit on and go to work, just like Romney. They say hello to their assistant, just like Romney. The difference? Our investment advisor (just go with me on this) files his taxes. He files as one of many choices, an S corp, LLC, etc. These are flow thru entities. They pay no taxes. Our investment advisor, who has Adjusted Gross Income of 110,100 will pay
6.2 % FICA (please....let's not argue about the temporary break on FICA) on this compensation. He will also pay 2.9 %
Medicare on this compensation. Married, with one child, after deductions and exemptions, his taxable income is about 90,600. His federal tax on this will be 14,716. That equates to 16.24%.
Let's add it up. FICA at 6.2%, plus Medicare at 1.45%, plus the "average" rate of 16.24 for a total of 23.89%. Oops!
He is self-employed so the broker has to also pay 6.2% Fica and 1.45% Medicare.
I know..I know, that (total) 7.65% is deductable for him as a self-employed guy. This guy is closing in on 28% (would love to see Romney’s returns- just sayin)
Romney did not passively throw cash into a hedgefund. He "worked" there. Carried interest or wages.....Looks like wages to me.
Remember when many ridiculed Warren Buffet for saying that his secretary paid a higher rate of taxes than he did.

Genius one day and moron at their convenience.

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