Obama’s campaign is now running this video:
Is it true? In a word, no, and several groups have pointed it out. FactCheck.org for example:
According to Romney’s 2010 tax return, he had an adjusted gross income of about $21.7 million in 2010 and paid about $3 million in taxes. That comes to an effective tax rate of 13.9 percent. That’s considerably less than the amount paid by most people with that high of an income, but in Romney’s case most of his income comes from dividends and capital gains — which are taxed at 15 percent rather than the highest marginal rate of 35 percent. Romney dipped below the 15 percent threshold because he donated about 14 percent of his income to charity.
The question, though, is whether Romney paying 14 percent is “probably less than you.”
It’s not if you look strictly at the income tax paid to the IRS. Scott Hodge, president of the business-backed Tax Foundation, released a report based on 2009 IRS tax data that found 97 percent of American tax filers paid a lower rate of income tax than Romney did. The bottom 40 percent of tax filers pay no income tax at all, or receive a refund, Hodge told us in a phone interview, and so “by definition, those people are paying less than Mitt Romney.” On average, Hodge said, people making between $100,000 and $200,000 paid about 12 percent in federal income taxes. That’s less than Romney’s 13.9 percent, and people making less than $200,000 represent more than 97 percent of all tax filers.
In fact, at 14 percent, according to the Tax Policy Center, Romney pays a higher rate than 97 percent of Americans.
Of course, that considers income tax only. What about with payroll taxes? Then it edges up. Again from FactCheck.org:
But there’s another way to look at this, and that is to include payroll taxes, those often unnoticed taxes that are usually withheld from an employee’s paycheck to pay for such things as Social Security, Medicare and unemployment insurance. The employer also pays payroll taxes for each employee, money that arguably would go to an employee if the company didn’t have to pay it. Together, those payroll taxes actually account for the lion’s share of federal taxes most people pay.
In February, the nonpartisan Tax Policy Center released an analysis that found that when you include income tax and payroll taxes paid both by the employee and employer, people in the middle 20 percent paid an effective rate of 15.5 percent. That’s a higher percentage than Romney (who paid no payroll taxes because he declared no wages or salary in 2010).
I’ll just note in passing that if the Obama campaign is making that argument, it would be the first time in living memory that a Democrat has admitted the employer’s share of FICA was a tax on the employee. Romney, being retired as far as the tax law goes — no wages, living entirely on investment income — doesn’t pay employment taxes.
But what about all those people in the Obama video who say they’re paying much more? The problem is that most people confuse their actual tax rate and their marginal rate. Your actual tax rate is easily calculated: take how much tax you paid over your total income. The marginal rate is what you pay on your next dollar of income at your current, basically what the tax tables tell you when you do your taxes. But because we have a progressive tax system, that’s not your total tax rate. Say you make $50,000 — the first $20,000 or so has a tax rate of zero. The next maybe $25,000 is taxed at, say, 12 percent. Then, in this admittedly contrived example, you get to that last $5000, and it’s taxed at your marginal rate, say 20 percent. But you remember your marginal rate and think your actual tax rate is 20 percent.
It isn’t a tax rate commercial, its a class warfare rich guy commercial.
Romney is a rich guy >> rich guys are bad >> vote for Obama!
Now thay can’t come out and just call all rich people bad, because some Democrats are the richest in Congress: see Pelosi, Nancy and Kerry, John.
So they mix up the facts on wages versus investments or actual and marginal tax rates? The Won don’t need no stinkin facts!
The thing that pisses me off about these discussions is that whole “payroll tax” thing. Social security and medicare is not supposed to be a tax. It is supposed to be a contribution for the employee’s future retirement. An investment to be used in the future. If Congress would quit borrowing from it. If uyou make a contribution to your retirement, and your employer matches it, it is not supposed to be a tax. But since LBJ’s great society program, Congress has been using the social fund as it’s own little piggy bank. So instead of sound investing, we spend it, and now there’s not enough for people to retire on.
I would imagine that if we were to go back over 30 years, we’d find Mitt paid plenty into the social security system. And now that he’s retired and can live off his other investments, he’s no longer paying into it any more than my retired parents are no longer paying into it. I wish we could have invested their “contributions” into something better than social security.
Yeah: Federal Insurance Contribution Act. Two lies in four words.
[i]It is supposed to be a contribution for the employee’s future retirement. [/i]
I can’t believe people still believe that lie. It’s been nearly fifty years since the Supreme Court ruled that you do not have a right to receive money from Social Security, only a duty to pay.
Of course it’s a tax. There has never been a moment in the history of the Social Security program when it wasn’t a targeted welfare program for the elderly funded by a special tax. The language of “contribution” and “beneficiary” was borrowed from the pension system in order to pull the wool over people’s eyes, but it’s never been structured as a pension plan.
(While I’m ranting, may I mention how much referring to the employee portion of Social Security as “the payroll tax” gets on my nerves? A payroll tax is a tax on payroll, not on income. The employer portion is a payroll tax: a tax levied on employers for the act of employing people. The employee portion is an income tax – a tax levied on workers for the act of earning income – not a payroll tax.)
Agreed, Walt C. My mother admitted that the thing that bothers her most about my and my sister’s generation is that her generation messed things up so badly that our generation is likely going to be stiffed out of everything we’re being robbed of for SS and Medicare. I told her that neither my husband nor myself ever figured we’d see a penny of it and neither of us ever figured that we’d ever be able to retire if we wanted to see our son’s generation free of the problem. I said we both just accepted that somewhere along the line at least one generation was going to have to suck it up and take the great sacrifice in order to avoid dooming everyone else we loved.
And we better hope that during that time, if we have to keep setting money aside, we do the sensible thing and give control of that money back to the people who earn it.
I’ve been fortunate to have known a few self-made rich people. All but a small minority not only pay a greater share of their income to taxes, but most, like Romney, give a hell of a lot to charity. The far-left big gubmint liberals (AKA rat bastard commies, or RBC’s) only admire charity when it runs through gubmint so they can use it to destroy the American traditional family and work ethic via their social engineering schemes.
Old School: short, sweet and profoundly insightful summary. Thanks for posting!
During the 2010 CA Senate campaign between Boxer and Fiorina, the public employee unions put out a rumor that Fiorina left the campaign in the final weeks of the race to go in for plastic surgery. The real reason was a complication related to her breast cancer.
Shameless.
Math continues to be hard
And racist.
Doesn’t even mention is that the dividends paid out are not deductible by the business so are taxed at a 35% rate at the corporate level. The employer paid taxes are about 7.65% and they and the wages are deducted before business taxes are figured.
“Your actual tax rate is easily calculated: take how much tax you paid over your total income. ”
If most Americans were willing/able to do that kind of math the country wouldn’t be in this shape in the first place.
There’s a reason these Romney Rumors are getting sheep for their thumbnail.
Actually, Romney DOES pay employment taxes – he pays Self Employment Tax on his speaking fees, duly reported on Schedule C.
True. It was about 13K as I recall, which is pretty much epsilon.
Why this issue being addressed using the “Adjusted Gross Income” calculations?
Why aren’t we calculating all this against “Taxable Income”?
So what is the tax rate paid by our resident Comminity Organizer in Chief?
Does his declared income include the capital gains of properties transferred to him via below market real estate transactions, like the one he did with his pal Tony Rezko in Chicago? No? I didn’t think so.
My household income is right around the national median. I have three dependents and mortgage interest deductions. I don’t cheat on my taxes. My line 61 taxes divided by my AGI comes to 4.5% I feel sorry for Mitt Romney having to pay so much more than I do.
Looking at last year’s tax forms, I added social security and medicare withholding to total gross income. I then figured the tax by doubling the social security and medicare withholding and adding property tax, state income tax, and federal income tax.
I ignore deductions and exemptions.
By this calculation, my tax rate is 26.4% — and that doesn’t include such things as sales taxes, gas taxes, corporate taxes passed on to consumers, excise taxes (ditto).
I would not surprised to find that those of us with incomes between 100 and 250 thousand pay 30-40% in taxes, when all tax incidence is taken into account — and I would be even less surprised to learn that both folks who make 0-100k and those who make over 250K pay at a significantly lower rate.
The big lie is that the Obama campaign is comparing apples and oranges.
First, they can’t count employer contributions because those are taxes that the employer pays, not the taxpayer. If you’re going to count employer contributions, then you also have to count for Romney the taxes corporations pay on the dividends before they are distributed.
Second, they can’t count FICA and medicare withholding because taxpayers are ostensibly getting something in return for their contributions (yeah, I know that there are no guarantees).
Third, if they want to count other taxes for everyone but Romney, then, to be fair, lets include state income taxes, property taxes, sales taxes, luxury taxes, etc. I’ll bet when the dust settles from those calculations, Romney will have a much higher tax rate.
Let’s throw these bunch of lyin’ creeps out of office!