The White House blasts Fox News’ host Chris Wallace for misleading his audience on taxes

The biggest problem with discounting Fox News with things like FACTS is that the people who should read them won’t, those who should hear them wouldn’t listen anyway, those who need to know have decided not to believe. And do you suppose this information will be picked up or distributed in any way via the mainstream media? My guess: no. From the White House Blog:

… 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.

[...] Here are the facts:

Claim: The top 10 percent wealthiest Americans pay 70 percent of federal income taxes.

Fact: This statistic presents a deeply misleading picture of the actual federal tax burden because (1) it fails to include payroll taxes, which every worker pays, and which fall disproportionately on the middle class, and (2) because it doesn’t reflect that high-income Americans earn a disproportionate share of income.     

  • Payroll taxes account for 34 percent of federal revenues. They only apply to income earned on the job – not income from capital gains on investments, which make up a much greater share of the income of the top 10 percent. And payroll taxes for Social Security are capped at $106,800.
  • For both of these reasons, wealthier Americans face a disproportionately lower burden from payroll taxes.   According to the independent, non-partisan Congressional Budget Officethe wealthiest 10 percent only pay 25 percent of all payroll taxes.
  • Counting both payroll and income taxes, the top 10 percent only pay about 50 percent of that tax burden – not much larger than their share of our nation’s income (around 42 percent).
  • The top 10 percent (households earning an average of nearly $400,000) has been earning a larger and larger share of our nation’s income. Twenty years ago, they accounted for 34 percent of our nation’s income. In the past twenty years – as tax rates have fallen for the highest earners – the income share of the top 10 percent has grown to 42 percent of our nation’s earnings.
  • This aggregate figure also masks the fact that certain high-income Americans pay far less than others—and less than the middle class.  That’s what the Buffett Rule is meant to address.

Claim: The 1 percent of households with the highest incomes pay 38 percent of federal income taxes.

Fact: This statistic again ignores the payroll taxes that every working American pays, and the fact that incomes of the top 1 percent have increased rapidly in recent years.

  • As with calculations about the tax burden of the top 10 percent, this claim ignores payroll taxes that every American worker pays, but fall much less on the highest earners.
  • In fact, the top 1 percent of all Americans only pay 4.1 percent of the nation’s payroll taxes. Overall, they pay about one-quarter of federal income and payroll taxes.
  • While this may seem like a high share, consider that over the past twenty years, the portion of our nation’s income going to the top 1 percent (households earning an average of nearly $2 million) has nearly doubled – from 11 percent in 1987 to 19 percent in 2007 (the latest year for which the CBO publishes tax burden data).
  • While the top 1 percent pays about one-quarter of our federal income and payroll tax, they also earn 19 percent of our nation’s income. 

Claim: 46 percent of households pay no federal income tax at all.

Fact: Around 82 percent of Americans pay income or payroll taxes, and those who don’t are mostly elderly people.

  • Ignoring payroll taxes presents a particularly misleading picture for middle income taxpayers.
  • In fact, according to the independent, non-partisan Tax Policy Center, around 82 percent of Americans pay income or payroll taxes.
  • As confirmed last week in a “Reality Check” article by the Washington Post, of the remaining 18 percent, 10 percent are elderly people who generally don’t earn salaries or wages, and 7 percent are people with incomes under $20,000 per year. As the article explains, of the people who pay no federal income or payroll taxes, “most are low-income workers or elderly living only on Social Security.”

Read the whole thing… (h/t: politicususa)

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4 thoughts on “The White House blasts Fox News’ host Chris Wallace for misleading his audience on taxes

  1. Okay, so Chris Wallace was 100% accurate. So, ex post facto, let’s change the question, then pretend he was answering that one, and call him “misleading”. Got it. Yawn.

  2. Pingback: Top 1% of taxpayers receive more income than entire bottom half combined | Under the Mountain Bunker

  3. Pingback: Only government can boost the economy, and only taxing wealth can restore US prosperity | Under the Mountain Bunker

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