Those famous words are the utterance of our second president, John Adams. On the opposite end of the spectrum, and barely at that, lies our current inhabitant of the White House, who, on Monday, stated "Middle-class families shouldn't pay higher taxes than millionaires and billionaires." So, are the rich taxed less? Well, Stephen Ohlemacher of the AP did a little fact checking, and the data he found tells quite a different story than Obama's claims:
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.
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. That, however, was less than 1 percent of the nearly 237,000 returns with incomes above $1 million.
Ohlemacher goes on to explain how those households making more than a million do indeed pay higher federal taxes, including income & payroll taxes, than lower income households. Here's this year's tax brackets on wages:
over $1 million @ 29.1%
$50,000 and $75,000 @ 15%
$40,000 and $50,000 @ 12.5%
$20,000 and $30,000 @ 5.7%
2009 figures show similar variations: $1+ million @ 24.4%, $100,000 to $125,000 @ 9.9%, $50,000 to $60,000 @ 6.3%.
Here's where Obama blurs distinctions: wages vs. investments!
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.
Seems as though Obama has miscalculated a bit and jumped the shark with his 'Buffett Rule'. However, Obama doesn't want the distinction between wages and investments understood or explained. His bets are hedged on emotional responses against the rich over understanding that wages and investments are different entities and are treated, or taxed, as such. In fact, investments are double taxed at both the corporate and personal levels! What Obama and Buffet are advancing is the notion of now taxing investments even more, which I alluded to in last night's post, because not only are the rich an easy target, but confiscating more wealth is the statist thing to do. Rile up, or manipulate, working voters, while guilting the wealthy. But they didn't count on the stubborn facts of the matter.
