Getting the Facts Straight on America's Tax Burden

Last week, the President put forward a detailed plan for jobs, controlling our deficit, and comprehensive tax reform. The President’s tax reform plan will abide by the principles of cutting rates, getting rid of inefficient and unfair tax breaks, and observing the Buffett rule – a simple rule of simple fairness that no household making over $1 million annually should pay less in federal taxes than middle-class families pay.

Yesterday in an interview with Senior Adviser David Plouffe on Fox News Sunday, host Chris Wallace used misleading statistics to argue against the President’s efforts to level the playing field for middle class Americans by requiring that the wealthiest pay their fair share.  In an effort to falsely assert that the President’s plan would place an unfair tax burden on the wealthiest Americans, Wallace said that, “1 percent of households with the highest incomes pay 38 percent of federal income taxes. The top 10 percent pay 70 percent of federal income taxes. Meanwhile, 46 percent of households pay no federal income tax at all.”  

These statistics are misleading and don’t tell the whole story. They leave out payroll taxes that every worker pays to make sure they will have Social Security and Medicare when they retire, which fall disproportionately on the middle class. And they don’t mention that the share of the nation’s income going to the highest earners grew rapidly in the past two decades – at the same time tax rates fell for the highest earners.

In fact, because of growing income inequality, the top 10 percent of American earners now earns 42 percent of the nation’s income, and when correctly calculated, pay about 50 percent of the federal income and payroll tax burden - not much larger than their share of earnings.

As we continue to have a robust discussion about the President’s plans across our country, it’s important to understand exactly how they will affect Americans – from the middle class to the highest earners.

We already took on several tax myths here (see “Buffett Rule Facts and Fictions,” by NEC Director Gene Sperling) but given that more misleading information continues to make the rounds, it is important to set the record straight.

Here are facts:

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Source: http://www.whitehouse.gov/blog/2011/09/26/getting-facts-straight-americas-tax-burden

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