Fox News' Sean Hannity claimed that "the federal government and the state and local governments take about 50 percent of our income." Hannity's claim is contradicted by the conservative Tax Foundation, which has calculated that Americans' total tax burden has never exceeded 33.6 percent of income in a given year.
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On the April 26 edition of Fox News' Hannity & Colmes, co-host Sean Hannity claimed that "the federal government and the state and local governments take about 50 percent of our income." Hannity's claim about the aggregate tax burden faced by Americans is contradicted by the conservative Tax Foundation, which has calculated that Americans' total tax burden has never exceeded 33.6 percent of income in a given year. Moreover, the progressive Center for Budget and Policy Priorities (CBPP) has argued that even the Tax Foundation's figures overestimate the taxes paid by middle-income Americans.
Hannity made the claim while discussing rising gasoline prices with former Bush administration Secretary of Energy Spencer Abraham. Hannity asked: "How is it possible that the federal government and the state and local governments take about 50 percent of our income? ... Why don't we get angry at the people that take half our income?"
The Tax Foundation -- which lists among its guiding "principles" that "[t]axes should consume as small a portion of national income as possible" -- releases a report each April in which it estimates the "total effective tax rate" paid by Americans. The Tax Foundation calculates that figure by dividing per capita receipts for all federal, state, and local taxes -- including individual and corporate income taxes, payroll taxes, sales and excise taxes, property taxes, and "other business and miscellaneous taxes" -- by per capita income. According to the Tax Foundation's 2006 report, the tax rate peaked in 2000 at 33.6 percent. The Tax Foundation calculated a tax rate of 30.9 percent for 2005 and 31.6 percent for 2006.
According to the CBPP, however, the Tax Foundation's figures overestimate the total tax burden faced by "middle-income Americans." In an April 13 paper arguing that "middle-income Americans pay significantly less in taxes as a share of their income than the Tax Foundation's report implies," the CBPP stated:
Thus the Tax Foundation's conclusions about federal tax burdens cannot be generalized and applied to typical Americans in the middle of the income spectrum. This can be seen when Tax Foundation's findings are compared with estimates prepared by the Congressional Budget Office that look specifically at the tax burdens of middle-income families. For instance, in 2003 (the most recent year covered in the CBO analysis), CBO found that that the middle fifth of American households -- those in the middle of the income spectrum -- paid 13.6 percent of their income in federal taxes. In contrast, in its report from last year, the Tax Foundation estimated that the "average" American paid 18.7 percent of income in federal taxes in 2003. This is higher than what CBO found the middle fifth of households paid in federal taxes as a percentage of their income in 2000, before any of the Bush tax cuts were enacted.
The CBPP further stated that the "Tax Foundation counts capital gains taxes in total taxes but excludes capital gains income as part of the total income." According to the CBPP, this practice "distorts -- and inflates -- average tax rates." The Tax Foundation has responded that this and other CBPP criticisms of its methodology are "largely irrelevant" and that adding capital gains to its national income figure would have only a minimal impact on the study's overall results.
From the April 26 edition of Fox News' Hannity & Colmes:
HANNITY: Can I ask you a question? I was asking my radio audience this yesterday. How is it possible that the federal government and the state and local governments take about 50 percent of our income? Fifty percent. Most people don't even know it because it's taken out before they ever get it. And yet, it's -- the federal government taxes more and makes more on a gallon of gasoline. Why are people blaming the gas companies? Why are they more mad at them than the government that takes all their money? I don't understand, you know, the projected anger. I'm trying to understand. Why don't we get angry at the people that take half our income? Why are we getting mad at the gas companies?