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Wednesday, October 17, 2012

Statistics in the Debate -- Masking a Lot with the 60% Remark

Romney's team clearly taught him just how to handle the "tax breaks for the rich" issue, and unfortunately, Obama's team didn't prepare him to call Romney out in a convincing way.

Romney acts like he isn't cutting taxes for the rich at all.  Maybe he isn't, but he is keeping intact tax breaks and tax cuts initiated by George W. Bush, that Obama hasn't been able to persuade the Republican Congress to get rid of.  When Romney points out how much the deficit has increased under Obama, why doesn't Obama mention that part of the reason is the tax cuts that the Republicans refuse to budge on?

Romney also says that the rich will continue to pay 60% of the nation's taxes.  The are two problems with this:

1.  At least once he said the 60% in a way that might have made it sound like that was the tax RATE on the rich.  People who follow the issues knew what Romney was saying, but people who don't follow them all that closely -- undecided independents -- may well have heard that and thought that the tax rate was 60%.  I'm not sure what the right response was for Obama; perhaps it would have been best to mention again what their tax rate really is.

2.    More importantly, an easy response would have been:  This is an example of the problem -- he wants to keep taxes on the rich at the same rate, even while the rich are the only people in this economy getting richer.     From Steven Rattner's March 25, 2012 NYT Op-Ed (which cites statistics derived by French economists Thomas Piketty and Emmanuel Saez from American tax returns):


"In 2010, as the nation continued to recover from the recession, a dizzying 93 percent of the additional income created in the country that year, compared to 2009 — $288 billion — went to the top 1 percent of taxpayers, those with at least $352,000 in income. That delivered an average single-year pay increase of 11.6 percent to each of these households.

"Still more astonishing was the extent to which the super rich got rich faster than the merely rich. In 2010, 37 percent of these additional earnings went to just the top 0.01 percent, a teaspoon-size collection of about 15,000 households with average incomes of $23.8 million. These fortunate few saw their incomes rise by 21.5 percent."

So even though the rich and the super-rich are getting richer and richer, Romney wants them to pay the same share of taxes that they've been paying.  How does that make sense?  If the income of the rich is rising faster than that of the middle and lower classes, and yet the overall tax burden of the rich is kept constant, then that translates to a tax CUT for the rich.  That's simple math.

And as I've explained numerous times before, the vast majority of the rich are not job creators -- they are skimmers.

The below charts, from the IRS via the National Tax Payer's Union, show the percent of taxes paid by different income percentiles from 1999-2009.  We can see from this that Romney's 60% is the percentage of all Federal Taxes that are paid by the top 5% of earners -- i.e. those with Adjusted Gross Income greater than $154,643.  Again, as reported by Rattner, AGI for the rich went up in 2010.



Who Pays Income Taxes and How Much?

Tax Year 2009 
Percentiles Ranked by AGI
AGI Threshold on Percentiles
Percentage of Federal Personal Income Tax Paid
Top 1%
$343,927
36.73
Top 5%
$154,643
58.66
Top 10%
$112,124
70.47
Top 25%
$66,193
87.30
Top 50%
$32,396
97.75
Bottom 50%
<$32,396
2.25
Note: AGI is Adjusted Gross Income
Source: Internal Revenue Service
Tax Year 2008
Percentiles Ranked by AGI
AGI Threshold on Percentiles
Percentage of Federal Personal Income Tax Paid
Top 1%
$380,354
38.02
Top 5%
$159,619
58.72
Top 10%
$113,799
69.94
Top 25%
$67,280
86.34
Top 50%
$33,048
97.30
Bottom 50%
<$33,048
2.7
Note: AGI is Adjusted Gross Income
Source: Internal Revenue Service
Tax Year 2007
Percentiles Ranked by AGI
AGI Threshold on Percentiles
Percentage of Federal Personal Income Tax Paid
Top 1%
$410,096
40.42
Top 5%
$160,041
60.63
Top 10%
$113,018
71.22
Top 25%
$66,532
86.59
Top 50%
$32,879
97.11
Bottom 50%
<$32,879
2.89
Note: AGI is Adjusted Gross Income
Source: Internal Revenue Service
Tax Year 2006
Percentiles Ranked by AGI
AGI Threshold on Percentiles
Percentage of Federal Personal Income Tax Paid
Top 1%
$388,806
39.89
Top 5%
$153,542
60.14
Top 10%
$108,904
70.79
Top 25%
$64,702
86.27
Top 50%
$31,987
97.01
Bottom 50%
<$31,987
2.99
Note: AGI is Adjusted Gross Income
Source: Internal Revenue Service
For Tax Year 2005
Percentiles Ranked by AGI
AGI Threshold on Percentiles
Percentage of Federal Personal Income Tax Paid
Top 1%
$364,657
39.38
Top 5%
$145,283
59.67
Top 10%
$103,912
70.30
Top 25%
$62,068
85.99
Top 50%
$30,881
96.93
Bottom 50%
<$30,881
3.07
Note: AGI is Adjusted Gross Income
Source: Internal Revenue Service
For Tax Year 2004
Percentiles Ranked by AGI
AGI Threshold on Percentiles
Percentage of Federal Personal Income Tax Paid
Top 1%
$328,049
36.89
Top 5%
$137,056
57.13
Top 10%
$99,112
68.19
Top 25%
$60,041
84.86
Top 50%
$30,122
96.70
Bottom 50%
<$30,122
3.30
Note: AGI is Adjusted Gross Income
Source: Internal Revenue Service
 For Tax Year 2003
Percentiles Ranked by AGI
AGI Threshold on Percentiles
Percentage of Federal Personal Income Tax Paid
Top 1%
$295,495
34.27
Top 5%
$130,080
54.36
Top 10%
$94,891
65.84
Top 25%
$57,343
83.88
Top 50%
$29,019
96.54
Bottom 50%
<$29,019
3.46
Note: AGI is Adjusted Gross Income
Source: Internal Revenue Service
 For Tax Year 2002
Percentiles Ranked by AGI
AGI Threshold on Percentiles
Percentage of Federal Personal Income Tax Paid
Top 1%
$285,424
33.71
Top 5%
$126,525
53.80
Top 10%
$92,663
65.73
Top 25%
$56,401
83.90
Top 50%
$28,654
96.50
Bottom 50%
<$28,654
3.50
Note: AGI is Adjusted Gross Income
Source: Internal Revenue Service
 For Tax Year 2001 
Percentiles Ranked by AGI
AGI Threshold on Percentiles
Percentage of Federal Personal Income Tax Paid
Top 1%
$292,913
33.89
Top 5%
$127,904
53.25
Top 10%
$92,754
64.89
Top 25%
$56,085
82.90
Top 50%
$28,528
96.03
Bottom 50%
<$28,528
3.97
Note: AGI is Adjusted Gross Income
Source: Internal Revenue Service
 For Tax Year 2000
Percentiles Ranked by AGI
AGI Threshold on Percentiles
Percentage of Federal Personal Income Tax Paid
Top 1%
$313,469
37.42
Top 5%
$128,336
56.47
Top 10%
$92,144
67.33
Top 25%
$55,225
84.01
Top 50%
$27,682
96.09
Bottom 50%
<$27,682
3.91
Note: AGI is Adjusted Gross Income
Source: Internal Revenue Service
 For Tax Year 1999
Percentiles Ranked by AGI
AGI Threshold on Percentiles
Percentage of Federal Personal Income Tax Paid
Top 1%
$293,415
36.18
Top 5%
$120,846
55.45
Top 10%
$87,682
66.45
Top 25%
$52,965
83.54
Top 50%
$26,415
96.00
Bottom 50%
<$26,415
4.00
Note: AGI is Adjusted Gross Income
Source: Internal Revenue Service

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