As part of his deficit reduction plan, President Obama has proposed some tax increases on the wealthiest Americans, which would come via allowing the Bush tax cuts for the two highest tax brackets to expire and implementing the “Buffett rule,” which stipulates that millionaires and billionaires shouldn’t pay a lower tax rate than middle-class Americans.
Republicans have predictably, blown their collective top over the Buffett rule. And today, they were aided by a bizarre Associated Press “fact-check,” which purported to reveal something disingenuous about Obama’s plan. “President Barack Obama says he wants to make sure millionaires are taxed at higher rates than their secretaries. The data say they already are,” the AP wrote, noting that the average tax rate for those in the highest tax brackets is, of course, higher than the average rate for middle-class or low-income Americans.
This is not surprising, and it certainly doesn’t make the Buffett rule any less relevant. After all, as Center for American Progress Action Fund Director of Fiscal Reform Seth Hanlon wrote, “tons of data — including data cited in the AP article itself — confirm the compelling need for a Buffett rule because large numbers of super-rich individuals are indeed paying lower taxes than middle-class families”:
— 1,470 households reported income of more than $1 million in 2009 but paid zero federal income tax on it.
— The average federal income tax rate of the richest 400 people in the country in 2008 was 18.11 percent. In 2007 it was 16.62 percent. […] The tax rates paid by the “Fortunate 400” have plummeted since the mid-1990s, when their average effective rates were about 30 percent. […]
— Due to the so-called carried interest loophole, managers of hedge funds and private equity funds pay 15 percent capital gains rates, and no payroll taxes, on their profits from managing other people’s money. That’s less than what middle-class families pay just in payroll taxes on their wages — let alone what they pay in income taxes.
As Hanlon noted, “AP’s ‘fact check’ misses the point of the Buffett rule. The point is not to ensure that rich people on average pay higher taxes than middle-class people on average,” but “to ensure that all households with incomes above $1 million pay at least what middle-class families are paying.”
This is not the first time this month that the AP’s “fact-checkers” have bungled the facts regarding Obama’s economic plans. At this rate, they should think about opening a new division to fact-check the fact-checkers.