Fox's Angle Suggests High-Income Earners Have An Overly Heavy Federal Tax Burden

Jim Angle Attacks Obama For Calling For The Wealthiest To Pay “Their Fair Share.” During the July 11 edition of Fox Business' Lou Dobbs Tonight, Fox News chief national correspondent Jim Angle attacked President Obama for pushing for fairer taxes, claiming the rich have an overly heavy tax burden, and suggesting that others don't pay enough. From the segment:

JIM ANGLE: IRS figures show the top 1 percent of earners take home 16.9 percent of the nation's total income, but pay 36.7 percent of the nation's income taxes. The top 5 percent take home a little more than 31 percent of the total income but pay almost 59 percent of total taxes. And finally, the top 10 percent take home a little over 43 percent of the total income, but pay more than 70 percent of all income taxes. 

[...]

The President does not mention another factor in the fairness equation. Close to half of American workers pay no federal income tax at all.

[...]

The Administration often points to the ultra-wealthy who sometimes pay lower rates because they have a lot of deductions. But the averages for all groups paint a more accurate picture. For instance, the top 1 percent pay an average tax rate of more than 24 percent; the top 5 percent a little more than 20 percent. The top 10 percent, about 18 percent. For the bottom 50 percent of taxpayers, the average rate is 1.85 percent. [Fox Business, Lou Dobbs Tonight, 7/11/12]

But As The Share Of National Income For The Wealthiest Americans Has Skyrocketed ...

CBO: “The Share Of Income Going To Higher-Income Households Rose, While the Share Going To Lower-Income Fell.” An October 25, 2011, Congressional Budget Office (CBO) report found that the top fifth of all earners saw their share of after-tax income increased by 10 percentage points - with almost the entire gain going to the top 1 percent - while the other four-fifths of earners saw their share of after-tax income fall. The report included this chart which depicts the gains made by the top fifth and the losses by the rest:

[Congressional Budget Office, 10/25/11]

Economist Emmanuel Saez: In 2010 The “Top 1% Incomes Grew By 11.6 Percent While Bottom 99% Incomes Grew Only By 0.2%.” In a paper released in March, University of California, Berkeley Economist Emmaunel Saez found that in 2010, the income of the top earners grew much more than the income of the rest of Americans. He also found that since 1993, top earners' income grew 58 percent while the earnings for the rest of Americans only grew 6.4 percent. [Economics for Public Policy, 3/2/12]

CRS: The Top Five Percent's Share Of Income Rose From 16.3 Percent To 21.3 Percent. A March 7 Congressional Research Service (CRS) report found that the wealthiest Americans saw their share of income captured in a given year increase between 1968 and 2010. From the report:

If income were equally divided across households, each quintile (fifth) would account for 20% of total income. The Congressional Budget Office and others have documented that the bottom fifth has long accounted for much less than 20% of total income. The bottom quintile's share of income has remained little changed for the past few decades at less than 4%, according to Census Bureau data. In contrast, the income shares of the top fifth and the top 5% of households appear to have trended upward. The top fifth's share of total household income rose from 42.6% in 1968 to 50.2% in 2010; the top 5%'s share, from 16.3% to 21.3%. (Estimates derived from federal income tax data suggest that those at the very top of the income distribution have experienced greater gains.) The middle class, defined as the middle 60%, received a disproportionately smaller share of the total economic pie in 2010 (46.5%) than in 1968 (53.2%). [Congressional Research Service, 3/7/12]

... The Wealthiest Americans Have Naturally Paid A Larger Portion Of Federal Taxes

Krugman: “The Rich Are Paying More Taxes Because They're Much Richer Than They Used To Be.” In a September 22, 2011, New York Times op-ed, Nobel-prize winning economist Paul Krugman noted that the “the rich are paying more taxes because they're much richer than they used to be.” From The New York Times:

On one side, we have the claim that the rising share of taxes paid by the rich shows that their burden is rising, not falling. To point out the obvious, the rich are paying more taxes because they're much richer than they used to be. When middle-class incomes barely grow while the incomes of the wealthiest rise by a factor of six, how could the tax share of the rich not go up, even if their tax rate is falling? [The New York Times, 9/22/11]

The Atlantic: Increase In Taxes Paid By Rich Is “The Result Of Rising Household Income At The Top.” An April 14, 2010, Atlantic article found that the top earners have paid an increasingly larger portion of all federal taxes because they have gotten wealthier. From the article:

Tax Share

Big picture: the cost of paying for the US government falls increasingly on the rich.

In 1979 the top quintile contributed 56% of all federal taxes. In 2006 they contributed nearly 70%. The share of federal taxes paid by the top 1% nearly doubled in that time from 15% to 29%. Tax shares declined for every group except the top 20 percent, as the tax burden shifted from the bottom 80% to the top 20%. But again, this was not the result of rising tax rates. It was the result of rising household income at the top. [The Atlantic, 4/14/10]

WSJ: In 2007 Top Earners Paid 70 Percent Of Federal Taxes, Earned 60 percent of Pre-Tax Income.  An April 16 Wall Street Journal MarketWatch post explained that while the “top 20% of income earners paid 70% of federal taxes in 2007,” "[t]hat group also pulled in 60% of total pretax income, according to the CBO." [The Wall Street Journal, MarketWatch, 4/16/12]

Economist Mark Thoma: The Tax Burden On The Wealthiest Increased Less Than Their Income Growth. In a January 18 CBS News commentary piece analyzing the tax burden of the wealthy, University of Oregon Economist Mark Thoma explained that “a doubling of income” for the highest earners “resulted in less than a doubling of taxes.” From CBS News:

Let's take the top 1% first. Between 1979 and 2007 income for this group grew by 275 percent, and the share of income doubled from around 10 percent to around 20 percent of total income. However, the share of taxes for this group less than doubled. Thus, a doubling of income resulted in less than a doubling of taxes. Given that income growth outpaced tax growth, it's hard to see how we can describe this as an increase in the tax burden for the top 1%. [CBS News, 1/18/12]

CAP: The Rich Are “Paying More Of The Taxes Now” Than They Did Before “Because They Are Now Making That Much More Of The Nation's Income.” A March 6 Center for American Progress (CAP) post asserted that while “the share of federal taxes paid by the top 1 percent of income earners has increased from 14.2 percent in 1980 to 28.1 percent in 2007...the top 1 percent's share of total income has more than doubled.” From the post:

In other words, the richest Americans are paying more of the taxes now than they were in 1980 because they are now making that much more of the nation's income. The rising share of taxes paid by the top 1 percent in the past three decades is not evidence that the rich are now overtaxed; it's evidence of rising inequality.

The post included the following graph:

[Center for American Progress, 3/6/12]

Still, Practically All Americans Pay Some Federal Taxes

CBPP: Claims That Almost Half Of Americans Do Not Pay Income Taxes “Greatly Overstates” The Share Of Households Not Paying Taxes. The Center on Budget and Policy Priorities (CBPP) notes that relying only on income taxes as a measurement disappears the payroll tax, which many middle and low income earners pay. In truth, about 17 percent of Americans do not pay federal taxes, and this number includes students who will soon begin paying federal taxes, the elderly, and the disabled:

These figures cover only the federal income tax and ignore the substantial amounts of other federal taxes -- especially the payroll tax -- that many of these households pay.  As a result, these figures greatly overstate the share of households that do not pay federal taxes. Tax Policy Center data show that only about 17 percent of households did not pay any federal income tax or payroll tax in 2009, despite the high unemployment and temporary tax cuts that marked that year. In 2007, a more typical year, the figure was 14 percent. This percentage would be even lower if it reflected other federal taxes that households pay, including excise taxes on gasoline and other items.

Most of the people who pay neither federal income tax nor payroll taxes are low-income people who are elderly, unable to work due to a serious disability, or students, most of whom subsequently become taxpayers. (In years like the last few, this group also includes a significant number of people who have been unemployed the entire year and cannot find work.) [Center on Budget and Policy Priorities, 4/11/12, emphasis original]

Tax Policy Center's Howard Gleckman: It Is “Flat Wrong” To Claim That 50 Percent Pay No Taxes.  In his article “About Those 47 Percent Who Pay ”No Taxes", the Urban Institute's Howard Gleckman points out that most people pay Social Security and Medicare payroll taxes, along with sales and even property taxes:

Let me explain--repeat actually--what this means: About half of taxpayers paid no federal income tax last year. It does not mean they paid no tax at all. Many shelled out  Social Security and Medicare payroll taxes. In fact, only 14 percent of Americans didn't pay either income or payroll taxes. Some paid property taxes and, it is fair to say, just about all of them paid sales taxes of one kind or another. So to say they pay no taxes is flat wrong.

However, this class warfare-like rhetoric plays to a perception that the income tax is a chump tax: Only hard-working folks like us pay it. The welfare queens don't. The super-rich don't. It is a powerful emotional argument. It is also flat wrong. [Tax Policy Center, TaxVox, 4/15/10]

CBPP: “Low-And-Moderate-Income People Pay A Much Larger Share Of Their Incomes In Federal Payroll Taxes Than High-Income People Do.” The Center on Budget and Policy Priorities explained that 86 percent of working households pay more in payroll taxes than they do in federal income taxes. From the CBPP:

The reality is that the income tax is one of a number of types of taxes that individuals pay, both over the course of their lifetimes and in a given year, and it makes little sense to treat it as though it were the only tax that matters.  Some 82 percent of working households pay more in payroll taxes than in federal income taxes.[15]   In fact, low- and moderate-income people pay a much larger share of their incomes in federal payroll taxes than high-income people do: taxpayers in the bottom 20 percent of the income scale paid an average of 8.8 percent of their incomes in payroll taxes in 2007, compared to 1.6 percent of income for those in the top 1 percent of the income distribution. 

The CBPP report included the following graphs:

[Center on Budget and Policy Priorities, 4/11/12]

Tax Expert David Cay Johnston: Payroll Taxes “Are Paid Mostly By The Bottom 90 Percent Of Wage Earners.” In an article outlining “a few points about taxes and the economy that you may not know,” Reuters columnist David Cay Johnston, a former New York Times reporter who won the Pulitzer Prize for his reporting on the tax code, wrote:

Social Security, Medicare and unemployment insurance taxes (known as payroll taxes) are paid mostly by the bottom 90 percent of wage earners. That's because, once you reach $106,800 of income, you pay no more for Social Security, though the much smaller Medicare tax applies to all wages. Warren Buffett pays the exact same amount of Social Security taxes as someone who earns $106,800. [Willamette Week, 4/13/11]

In Fact, The Share Of Total Taxes Paid By Each Income Group Nearly Matched Their Share Of Total Income

CTJ: The Total Effective Tax Rate For The Top 1 Percent Is Only Slighter Higher Than The Effective Tax Rate For The Middle Class. Taking into account all federal, state, and local taxes, an April 4 report by the Citizens for Tax Justice (CTJ) revealed that in general, people pay the nearly the same percentage in total taxes as their share of total income. The top 1 percent earn 21 percent of total income and pay 21.6 percent of total taxes. What's more, the 1 percent pay a total effective tax rate that is only 4 percentage points higher than that of the middle 20 percent of earners, and only 11.6 percentage points higher than the effective rate paid by the bottom 20 percent. The following graphs illustrate CTJ's report:

[Citizens for Tax Justice, 4/12/12]

And The Poor Have A Higher State And Local Tax Burden Than The Wealthy

CBPP: The Poor Pay A Greater Percentage Of Their Income In State And Local Taxes Than Any Other Earning Group. When it comes to state and local taxes, the bottom 20 percent of income earners pay 12.3 percent of their earnings. In contrast, the top 1 percent only pay 7.9 percent of their income in state and local taxes.  From the CBPP:

[Center on Budget and Policy Priorities, 4/11/12]

Johnston: “When It Comes To State And Local Taxes, The Poor Bear A Heavier Burden Than The Rich In Every State Except Vermont.” In his article on taxes and the economy, tax expert David Cay Johnston wrote that “the poor bear a heavier burden than the rich in every state except Vermont” when you include state and local taxes. From Willamette Week:

When it comes to state and local taxes, the poor bear a heavier burden than the rich in every state except Vermont, the Institute on Taxation and Economic Policy calculated from official data. In Alabama, for example, the burden on the poor is more than twice that of the top 1 percent. The one-fifth of Alabama families making less than $13,000 pay almost 11 percent of their income in state and local taxes, compared with less than 4 percent for those who make $229,000 or more. [Willamette Week, 4/13/11]

To see Fox's previous attempts to define “fairness” as lower taxes for the wealthy, click here.

To see Fox's calls for hiking taxes on working and low-income Americans, click here.