On Wednesday, the New Hampshire Union Leader penned a misleading editorial about the tax rates different groups of Americans paid as a percentage of their income. The piece attacked President Obama's call for wealthy Americans to pay more by claiming "the rich and super-rich pay a far higher percentage of their income in taxes than the lower and middle classes do." From the Union Leader:
As you can see, the rich and super-rich pay a far higher percentage of their income in taxes than the lower and middle classes do. On average, people who earn more than $500,000 a year pay more than three times the percentage that people earning less than $100,000 a year pay.
When looking at all federal taxes paid, the richest 20 percent of Americans paid 68.9 percent of them. The richest 1 percent paid 28.1 percent. Despite recent rhetoric from the President, the rich shoulder a much larger share of the federal tax burden than everyone else.
It's quite apparent from the editorial that the Union Leader is leaving out a substantial amount of information about taxation and the rich in America. First of all, from 1983-2009 the top 5% of Americans accounted for 81.7% of the wealth gain in the United States. Despite gaining a bigger piece of the pie, thousands of millionaires and billionaires are paying a smaller share of their incomes in taxes than millions of middle-class Americans; in 2009, for instance, 1,470 of the richest Americans paid no federal income taxes at all.
Tax rates for the wealthiest Americans have been steadily falling over the past 50 years. In 1960 the top marginal income tax rate was 90% while today it is just 35%. However, given the Union Leader's own data, it doesn't seem like many are paying that rate anyway. What is notable from the Union Leader's data is that after the $2 million to $5 million dollar bracket the percentages begin to decrease again -- evidence that many of the wealthiest earners are paying a lower percentage of their income in taxes than those that make less than them.
By only referencing income tax rates, the Union Leader deceptively omits the fact that the middle class shoulders a disproportionately excessive burden when it comes to payroll, excise and state and local taxes. As the Center for Budget and Policy Priorities points out:
Considering all taxes -- federal, state, and local -- the bottom 20 percent of households pays an average of 16 to 17 percent of their incomes in taxes. The next 20 percent of households pays about 21 percent of income in taxes, on average.
It's disingenuous for the Union Leader to put up income tax numbers and claim the burden on the rich is so onerous. Ultimately the hardship and burden falls on those making the least, not the most. As Jonathan Chait, formerly of The New Republic, explained in an October 2010 column:
It would be nice if nobody had to pay taxes. Given that we do, though, shifting a greater share of the burden onto the rich causes less hardship. (Raise Paris Hilton's taxes by 1 percent and that's one less vacation home for her grandchildren; raise her maid's taxes by 1 percent, and her kids are sweltering because they can't afford air-conditioning.)