On the September 21 broadcast of his nationally syndicated radio show, Rush Limbaugh falsely claimed that "[m]any of those getting tax cuts in the aftermath of Hurricane Katrina will not have paid any taxes at all." In fact, evidence suggests that only $125 million of the $6.1 billion Katrina Emergency Tax Relief Act of 2005 will go directly to individuals who do not pay income taxes. Further, most -- if not all -- individuals who do not pay income taxes still pay Social Security payroll taxes and sales taxes.
Limbaugh made the comment in the context of criticizing an Associated Press article headlined "Tax Breaks for Katrina May Aid Rich More," which reported that "some elements of the tax assistance [for Hurricane Katrina victims] would do more for wealthier taxpayers because many lower income individuals and families pay little tax." Limbaugh took issue with the article's suggestion that the bill disproportionately benefits the wealthy. But because the bill largely provides tax relief, it does, in fact, disproportionately benefit those who pay more taxes.
A Congressional Research Service (CRS) study of the tax relief legislation (H.R. 3768, the Katrina Emergency Tax Relief Act of 2005) recently passed by both houses of Congress states that "[s]ince the lowest income groups do not pay income taxes, only measures directed at earned income tax credits or refundable child tax credits are likely to reach these individuals." Similarly, the report, which was cited in the AP article, summarized that "[I]n many cases [the emergency tax relief] will be specifically focused on higher income individuals."
In conjunction with the CRS analysis, a breakdown by the congressional Joint Committee on Taxation of the estimated revenue effects of the tax relief bill reveals the fallacy in Limbaugh's suggestion that much of the tax relief proposed for the victims of Katrina would go to those who "will not have paid any taxes at all." The figures show that the "measures directed at earned income tax credits or refundable child credits" (H.R. 3768, section 406) account for only $125 million of the cost of the $6.1 billion bill, although some other provisions such as incentives for charitable giving and volunteerism could indirectly benefit individuals who do not pay income taxes.
Moreover, many of those who do not pay income taxes but qualify for relief under the earned income tax credit and child credit provisions do in fact pay taxes, in the form of Social Security payroll taxes. As Media Matters for America has previously documented, although many Americans (37.2 percent of total tax units -- single people or married couples) do not pay income taxes, the vast majority pay Social Security payroll taxes. And in most states, people pay sales tax as well. The majority of low-income individuals who pay no income tax, or who do not file at all, are subject to one or both of these taxes.
From the September 21 broadcast of The Rush Limbaugh Show:
LIMBAUGH: From the Associated Press, Mary Dalrymple doing the honors of writing this story. "House and Senate tax writers agreed yesterday to a package of tax breaks designed to help Hurricane Katrina victims recoup their losses and access needed cash. The Congressional Research Service, an office that provides lawmakers with nonpartisan legislative analysis, said some of those tax breaks could do more for higher income survivors than for the neediest."
Yes. People, they're going to get tax breaks for Katrina. It may help the rich more. The rich may benefit more from taxes and tax cuts that result from Hurricane Katrina. We should rethink this, ladies and gentlemen. Even though the rich were wiped out too, they still may benefit more. I will guarantee you this, ladies and gentlemen: Many of those getting tax cuts in the aftermath of Hurricane Katrina will not have paid any taxes at all. The people who pay taxes today are primarily the upper middle class, the rich, whatever you're going to call them, and the filthy wealthy.