The Rich Have a Lower Tax Rate Lie

Another lie that keeps making the rounds is that somehow The Rich pay a lower percentage of their income in taxes than do middle class earners. This is simply not true. The data below is from the Congressional Budget Office (for the full CBO report click here) and shows average tax rates paid by income quintiles (and the top 1%) in 2009  for all federal taxes (income, social insurance, corporate and excise taxes).


Quintile             Avg Income       Avg Federal Tax Rate 

Lowest               $23,500                 1.0%
Middle                $64,300               11.1%
Highest                $223,500             23.2%
Top 1%               $1,219,700          28.9%

The President keeps talking about the "Buffett Rule"-- which would supposedly impose a tax rate of 30% on the highest earners. What effect do you think this would have given that those people are already paying 28.9% of their income in taxes?




             

The Buffett Bust

For almost a year now, the President has touted what has come to be called the "Buffett Rule" -- essentially another Alternative Minimum Tax on high income households. With soaring rhetoric he has said that the choice is between lowering budget deficits and  "tax breaks for millionaires and billionaires". As usual rhetoric and facts don't mesh. This week the Joint Committee on Taxation announced that the Buffett Rule would generate -- wait for it -- drum roll -- $3 Billion per year in additional tax revenue. To put this in perspective as a deficit solution, that $3 billion per year amounts to:

• 0.23% of the FY2012 deficit
• 0.31% of the FY2013 deficit
• 0.43% of the FY2014 deficit
• 0.56% of the FY2015 deficit
• 0.57% of the FY2016 deficit

In other words, this is all about political posturing, and almost nothing to do with deficit reduction. It's right up there with the President's suggestion for reducing gasoline prices: check your tires and get a tune-up.

If the President could have collected a dollar for every mention of the Buffett Rule he generated, that would have far more impact on the Federal deficit than the rule itself.