Hours before President Barack Obama’s third State of the Union address in which he will push higher tax rates on the wealthiest under the guise of “fairness,” pivoting off the poster woman for higher rates, Warren Buffett’s secretary who supposedly pays a higher income tax rate than her boss, ABC and NBC advanced the narrative which confuses tax brackets with effective tax rates.
In fact, Romney pays at a much higher rate than most Americans and most people at Romney’s wealth level pay a significantly higher rate. “Mitt’s millions,” ABC anchor Diane Sawyer teased, “What Mitt Romney’s taxes really show about, wealth, taxes and fairness.” On the NBC Nightly News, Andrea Mitchell referred to “critics of the tax code that favors the rich.”
David Muir, in the World News piece plugged by Sawyer, recounted Romney’s tax payments: “His tax rate? In 2010, about 13.9 percent, perfectly legal under the current tax code which allows Americans to pay a much lower rate, a capital gains tax, when their earnings come from investments, and not a job.” Muir went to a “tax analyst” who dubiously insisted: “If he were a doctor or lawyer with the same salary, he would be paying 35 percent.”
Muir, however, failed to point out how that rate (estimated to be closer to 15 percent for 2011) is far greater than most Americans pay. As NB’s Noel Sheppard noted last week, after accounting for deductions, 97 percent pay an income tax rate lower than 15 percent – a number confirmed in this table posted by the liberal Tax Policy Center.
Journalists have no excuse for their continued distortions since one of their own, USA Today reporter Sandra Block, laid it out quite clearly in an article on the front page of Friday’s (January 20) “Money” section, “Tax bracket vs. tax rate: They’re two different things.” She explained:
Ask most Americans how much they pay in taxes, and they'll probably refer to their tax bracket, a series of rates that ranges from 10% to 35%. By that measure, Mitt Romney's tax rate sounds outrageously low.
But when the Republican presidential candidate revealed earlier this week that he pays about 15% in taxes, he was referring to his effective tax rate, not his tax bracket. And by that measure, he's paying a higher tax rate than the majority of taxpayers.
Under the United States' progressive tax system, income is taxed at graduated rates. An individual's tax bracket, sometimes referred to as the marginal tax rate, refers to the percentage of income that's taxed at the top tax rate — not the rate for the entire amount.
The effective tax rate, meanwhile, is the amount a taxpayer pays in taxes as a percentage of total income. The average effective federal tax rate for American taxpayers is 11%, according to an analysis of 2009 IRS data by the Tax Foundation, a non-profit research organization. For individuals with adjusted gross income of $50,000 or less, the average effective tax rate is less than 5%, according to the Tax Foundation....
While Romney's effective tax rate is higher than the national average, it's lower than the percentage paid by most high-income taxpayers. The average effective tax rate for taxpayers with AGI of $1 million or more is 25%, according to the Tax Foundation analysis.
Geoffrey Dickens’ “Liberal Media Boost Buffett and Obama's Attack on the Rich” round-up
From the Tuesday, January 24 ABC World News:
DAVID MUIR: ...That 2010 tax return and the estimate for 2011, showing Romney earned more than $42 million over two years solely from investments. Romney did not have a job. Paying about $6.2 million in taxes over two years. His tax rate? In 2010, about 13.9 percent, perfectly legal under the current tax code which allows Americans to pay a much lower rate, a capital gains tax, when their earnings come from investments, and not a job.
MARTIN SULLIVAN, TAX ANALYST: If he were a doctor or lawyer with the same salary, he would be paying 35 percent.
MUIR: And it turns out that Romney's tax rate is a much better deal now than it would have been under Ronald Reagan. The capital gains tax then: up to 20 percent to 28 percent. Not Romney's 13.9 percent. With so much talk in this country now about the one percent, Romney's income puts him in a category even smaller: 0.006 percent....