Money & The Economy

I’m Barack Obama, and I’m Going to Deceive You in this Message

Do you think this title is harsh? Maybe. But is it true?

Absolutely.

If you watch his most recent ad, President Obama is using the same old lie: https://www.huffingtonpost.com/2012/10/12/obama-mitt-romney-tax-rate_n_1962187.html (the video is near the bottom).

Why is this deception? Well, I’ve written about that before… many times.

President Obama is trying to convince Americans that Mitt Romney paid a lower tax rate than they did. This is profoundly incorrect, and the most important evidence to back my point, (taken from my previous post linked above) is the following table found in this IRS document which contains pertinent tax rate data:

 Click Image for Expanded View

These data show the number of income tax returns filed in their respective income ranges (the number is in thousands). For example, in 2009, there were 18,696,000 tax returns filed where the filer earned between $20,000 and $30,000. In the image, you will notice some data is circled. The large red oval encompases incomes that are < $50,000 yearly. The green oval encompasses incomes that are > $50,000 yearly. I’ve expanded upon this in the chart below.

Click Image for Expanded View

You will notice some key pieces of data highlighted on this chart. The chart also distributes the two taxpayer buckets circled in red and green the IRS chart: those making < $50,000 per year, and those making > $50,000 per year.  The explanations are as follows:

– Yellow highlight: This is showing the breakdown of incomes for the overall taxpayer buckets. Those making < $50,000 comprise 92,889,000 of the 140,495,000 total tax filers, which is around 66% of the total. Many  people focus on the “50% mark” – the income at which 50% of Americans make more and 50% of Americans make less. This is around $40,000 per year.

– Green highlight: This highlight shows the final income tax rate paid by each group. As you can see, those making < $50,000 paid an average income tax rate of -2.59%, and those making above $50,000 paid an average income tax rate of 13.54%. Each income bucket shows the respective rate paid by those within the bucket. For example, those making between $30,000 and $50,000 paid an income tax rate of about 2.9% while those making $200,000 to $500,000 paid an income tax rate of about 19.5%.

– Red highlight: This highlight shows the final tax rate paid after payroll taxes (Social Security, Medicare/Medicaid, etc.) are factored in. You will notice that since these taxes are paid on the first $106,000 income, they affect those in the < $50,000 bucket more. For those in the upper income ranges, there is little change from their pre-payroll tax rate and after these taxes are applied. Regardless, when these taxes are factored in, those making < $50,000 (again, about 66% of the all Americans), paid a total tax rate of about 5.4%. You will notice that those making > $50,000 paid a total tax rate of about 18.7%. The true “middle income group,” those making between $30,000 – $50,000 yearly (the average American income falls in this range), paid a total tax rate of about 10.55%

All the data presented in this analysis is FINAL. All tax rates are final. This means that every rate is presented after loopholes, deductions, and write-offs.

Why is this all significant? Well, for starters, as stated,  President Obama tries to claim that Mitt Romney pays a lower tax rate than “you.” I have stated time and time again that this is simply deceiving. Mitt Romney paid around 14% of his income in taxes; 66% of Americans paid 5.94%. How can he be paying a lower tax rate than most Americans when most Americans pay a grand total of about 5.94% in federal taxes? Fact: he doesn’t. Mitt Romney paid a higher greater tax rate than most Americans. Period.

Additionally, I know there are many taxpayers out there that claim, “I make $40,000 and I paid a higher rate than Mitt Romney,” but, when looking at the whole picture, my answer to those people falls into one of two categories:

1. No you didn’t. Yes, while you have paid your taxes throughout the year, you had these taxes removed from your paycheck. And yes, it seemed like they were removing quite a bit (from my paycheck, around 27% is removed each time). What most people seem to forget is that lower income earners tend to receive large tax refunds (notice the large negative income tax rates for low-income earners above). These people often forget to factor refunds in, and these refunds reduce the FINAL RATE PAID significantly. Take a look at my tax return info and see how much I received in a refund. That refund reduced my tax rate quite a bit: https://loudmouthelephant.blogspot.com/2012/01/part-2-what-do-mitt-romneys-tax-returns.html

2.You’re a statistic anomaly. It’s that simple. IRS data, as seen above, shows that those making < $50,000 annually, the majority of Americans, do NOT pay a greater rate than 14%. If you are, for whatever reason you do, you’re a rare breed.

In summary, can someone please explain to me how Barack Obama’s claim of Mitt Romney paying greater tax rates than most Americans is true? The case does exist, but on such an insignificant level. The facts and data show that Obama’s claim is just plain false. This has been shown time and time again, but yet Team Obama keeps repeating the same lie. How can anyone be okay with this? Please share your thoughts below.

Support Conservative Daily News with a small donation via Paypal or credit card that will go towards supporting the news and commentary you've come to appreciate.

Michael Ohanian

Michael Ohanian is a 30 y/o economist who resides in Maryland. He graduated Magna cum Laude from the University of Maryland Baltimore County with a B.S. in Financial Economics and currently works as a market economist for a private company. He is the owner and chief contributor of the conservative blog The Elephant in the Room: www.loudmouthelephant.com. On Facebook, he runs the blog's page (www.Facebook.com/LMElephantblog) as well. Mike is a permanent panel member for two conservative internet radio shows, OpinioNation and The 405 Live at 10:00pm EST on Wednesday nights and 10:00am EST on Saturday mornings, respectively. To listen, visit https://www.the405radio.com/.

Related Articles

Back to top button