O'Reilly cited phony stats to argue that taxes on rich are excessive

On his June 30 radio show, FOX News Channel host Bill O'Reilly tried to “blow off” the argument that wealthy Americans ought to pay more taxes by citing phony statistics about the tax burden the rich currently bear.

From the nationally syndicated June 30 broadcast of The Radio Factor with Bill O'Reilly:

O'REILLY: Just some stats. The top 5 percent of American wage-earners pay 57 percent of federal income taxes, so that blows off the thing that the rich are getting away with it, and they're not paying their fair share. All right? That this is from the Joint Economic Committee of Congress. Again, 5 percent, the richest five percent pay 57 percent of all federal income taxes.

In New York, right now, if you earn more than $250,000 a year, your income is taxed at 48 percent. In Boston, your income is taxed at 43 percent. And in L.A., your income is taxed at 44 percent. This does not count property, sales, gas, all of the excise taxes that they lay on after that.

While O'Reilly is correct about the percentage of federal income taxes paid by the richest 5 percent of Americans, the stat is misleading because it omits payroll taxes (the burden of which rests more squarely on low-income and middle-class Americans). According to the Tax Policy Center, a joint project of the Brookings Institution and the Urban Institute, the richest 5 percent of taxpayers will pay a more modest 40 percent of total federal taxes (including the payroll tax, income tax, corporate income tax, and estate tax) in 2004. (It's worth noting that they will also receive 34 percent of the total income in the United States.)

O'Reilly's claims about tax rates in New York City, Boston, and Los Angeles are simply false. Under current federal income tax rates, a single person earning $250,000 would pay $70,071 in taxes -- about 28 percent of income. In New York City, state and local taxes would total $18,750 and $10,625 respectively -- about 12 percent. So the aggregate tax burden for O'Reilly's hypothetical taxpayer amounts to 40 percent of income, not 48 percent as O'Reilly claimed. That 8 percent difference translates to a tax savings of $20,000. Moreover, this 40 percent tax burden doesn't include any federal or state deductions or credits, such as the home mortgage interest deduction. Married couples (filing jointly) and heads of households also pay less. So most taxpayers at that income level pay substantially less.

Massachusetts has a flat state tax of 5.3 percent. Unlike New York City, Boston has no additional resident tax, so a Boston resident earning $250,000 annually would pay at most 33.5 percent -- a savings of 9.5 percent, or $23,750 over what O'Reilly claimed.

For a Los Angeles resident earning $250,000, California state tax would total $19,610 -- 7.8 percent of income -- bringing the combined total for federal and state taxes to 35.7 percent at most -- a savings of 8.3 percent, or $20,750 over what O'Reilly claimed.