Updated Sep 20, 2011 - 3:03 pm
FACT CHECK: Are rich taxed less than secretaries?
Originally published: Sep 20, 2011 - 3:03 pm
WASHINGTON (AP) - President Barack Obama says he wants to make sure millionaires are taxed at higher rates than their secretaries. The data say they already are.
"Warren Buffett's secretary shouldn't pay a higher tax rate than Warren Buffett. There is no justification for it," Obama said as he announced his deficit-reduction plan this week. "It is wrong that in the United States of America, a teacher or a nurse or a construction worker who earns $50,000 should pay higher tax rates than somebody pulling in $50 million."
On average, the wealthiest people in America pay a lot more taxes than the middle class or the poor, according to private and government data. They pay at a higher rate, and as a group, they contribute a much larger share of the overall taxes collected by the federal government.
The 10 percent of households with the highest incomes pay more than half of all federal taxes. They pay more than 70 percent of federal income taxes, according to the Congressional Budget Office.
In his White House address on Monday, Obama called on Congress to increase taxes by $1.5 trillion as part of a 10-year deficit reduction package totaling more than $3 trillion. He proposed that Congress overhaul the tax code and impose what he called the "Buffett rule," named for the billionaire investor.
The rule says, "People making more than $1 million a year should not pay a smaller share of their income in taxes than middle-class families pay." Buffett wrote in a recent piece for The New York Times that the tax rate he paid last year was lower than that paid by any of the other 20 people in his office.
"Middle-class families shouldn't pay higher taxes than millionaires and billionaires," Obama said. "That's pretty straightforward. It's hard to argue against that."
There may be individual millionaires who pay taxes at rates lower than middle-income workers. In 2009, 1,470 households filed tax returns with incomes above $1 million yet paid no federal income tax, according to the Internal Revenue Service. But that's less than 1 percent of the nearly 237,000 returns with incomes above $1 million.
This year, households making more than $1 million will pay an average of 29.1 percent of their income in federal taxes, including income taxes, payroll taxes and other taxes, according to the Tax Policy Center, a Washington think tank.
Households making between $50,000 and $75,000 will pay an average of 15 percent of their income in federal taxes.
Lower-income households will pay less. For example, households making between $40,000 and $50,000 will pay an average of 12.5 percent of their income in federal taxes. Households making between $20,000 and $30,000 will pay 5.7 percent.
The latest IRS figures are a few years older _ and limited to federal income taxes _ but show much the same thing. In 2009, taxpayers who made $1 million or more paid on average 24.4 percent of their income in federal income taxes, according to the IRS.
Those making $100,000 to $125,000 paid on average 9.9 percent in federal income taxes. Those making $50,000 to $60,000 paid an average of 6.3 percent.
Obama's claim hinges on the fact that, for high-income families and individuals, investment income is often taxed at a lower rate than wages. The top tax rate for dividends and capital gains is 15 percent. The top marginal tax rate for wages is 35 percent, though that is reserved for taxable income above $379,150.
With tax rates that high, why do so many people pay at lower rates? Because the tax code is riddled with more than $1 trillion in deductions, exemptions and credits, and they benefit people at every income level, according to data from the nonpartisan Joint Committee on Taxation, Congress' official scorekeeper on revenue issues.
The Tax Policy Center estimates that 46 percent of households, mostly low- and medium-income households, will pay no federal income taxes this year. Most, however, will pay other taxes, including Social Security payroll taxes.
"People who are doing quite well and worry about low-income people not paying any taxes bemoan the fact that they get so many tax breaks that they are zeroed out," said Roberton Williams, a senior fellow at the Tax Policy Center. "People at the bottom of the distribution say, `But all of those rich guys are getting bigger tax breaks than we're getting,' which is also the case."
Treasury Secretary Timothy Geithner was pressed at a White House briefing on the number of millionaires who pay taxes at a lower rate than middle-income families. He demurred, saying that people who make most of their money in wages pay taxes at a higher rate, while those who get most of their income from investments pay at lower rates.
"So it really depends on what is your profession, where's the source of your income, what's the specific circumstances you face, and the averages won't really capture that," Geithner said.
(Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)
Snohomish County Executive Aaron Reardon speaks out about allegations
Snohomish County Executive Aaron Reardon is speaking out for the first time on the allegations that he misused county funds. - Tacoma Narrows Bridge toll going up in July
- WSDOT officials torpedo floating billboard idea
- Trial over caging autistic boys begins in Vancouver
- Boy rescued above waterfall not scared _ at first
- Officials torpedo Seattle floating billboard idea
- 2 Spokane officers injured arresting DUI suspect
- Seattle man found dead in kitchen
- More Local News »
Ross&Burbank: Who can eat the most cheeseburgers?
Rachel Belle, Luke Burbank, Sean DeTore and Libby Denkmann go head to head with cheeseburgers... and whiskey. - Rachel Belle: An Update on Jordyn & Her Wheelchair
- News Chick: Seattle woman tries to save denim factory
- Boze: Rapid Fire Monday 5-21-12
- Ron & Don: Saddened, but not surprised by most recent Everest tragedy
- Monson: Another reason for cameras in the classroom
- News Chick: Some thanks from Oklahoma City Thunder
-

The day in photos
May 21: Ball to the face, swimming mirror, graduation... -

Photos: Views of "ring of fire" solar eclipse
An annular eclipse appears Sunday, May 20, 2012. The... -

Italian earthquake destroys countryside churches
An earthquake shoot the Italian countryside early on... -

The official Dori Monson PoDog
Dori Monson unveils his very own PoDog for "Experience:...
What tight end Kellen Winslow brings to the Seahawks
Brock Huard | The Seahawks' ability to monitor the market and keep ample salary cap space enabled them to acquire Kellen Winslow, which should pay dividends in many ways. Man arrested in case of missing Calif. teen
Authorities have arrested a man in the kidnapping and death of a Northern California teenager whose disappearance more than two months ago has prompted hundreds of volunteers to turn out for organized searches. - Man in stable condition after Niagara Falls plunge
- Mich. jury close to finish line in stabbings trial
- What is hate? Rutgers webcam case rekindles debate
- Chicago police get high marks for NATO protests
- Ind. woman whose fetus died in suicide try freed
- Ill. lawmakers vote to abolish tuition waiver perk
- Joplin hospital honors 2011 tornado survivors
- More National News »
Ore. workers awarded $332K in onsite toilet fight
Two workers who claimed they were forced to urinate in a bucket have been awarded $332,000 after a jury found they were fired for complaining to Oregon regulators about the lack of an onsite toilet.- Ohio family hopes stolen swine statue is returned
- Mafia-style end for Australia's flawed Obama mugs
- Tons of pot found floating off Southern Calif.
- Ohio pair get engaged after running half-marathon
- Cocker spaniel rescued from 30-foot fall into well
- Ouch! Dog bites politician but she gets a vote
- Probation for builder of Calif.'s Phonehenge West
- More Odd News »





