O'Reilly's tax falsehoods: 50 percent “don't pay any federal income tax,” estate tax “unconstitutional”

Fox News host Bill O'Reilly falsely asserted that “50 percent of Americans don't pay any federal income tax” and that therefore “the other half is waging the whole war on terror.” He also claimed that the estate tax is “unconstitutional,” an assertion the Supreme Court rejected in a 1921 decision that has been repeatedly upheld over the years.

While O'Reilly claimed that half of all Americans do not pay income taxes, figures from the Tax Policy Center show that only 37.2 percent of total tax units -- single people or married couples -- pay either zero or negative taxes, or do not file at all, leaving 62.8 percent who do pay taxes.

O'Reilly's claim that the “the other half is waging the whole war on terror” is also false. Most Americans are funding the federal government's expenses, including military spending and foreign aid, though Social Security payroll taxes. The vast majority* of wage-earning Americans pay Social Security taxes on those wages, and as the Congressional Budget Office explains: “Although separate taxes are collected for Social Security, the money left over after benefits are paid is used to fund other government programs or to pay down the debt held by the public.” In 2004, that surplus was $151.1 billion, approximately 6.6 percent of the total outlays of the federal government. By contrast, President Bush requested $82 billion in February to fund U.S. military operations in Iraq and Afghanistan. Previously, Congress had allocated $25 billion during fiscal 2005 for those operations.

Further, the General Accounting Office (now called the Government Accountability Office) reportedPDF file in February 2004 that 61 percent of U.S. corporations paid no corporate income taxes between 1996 and 2000.

In addition, O'Reilly asserted that the estate tax -- which many conservatives refer to as the “death tax,” a name that, as Republican pollster Frank Luntz found, polls better for conservatives than “estate tax” -- was unconstitutional. But the Supreme Court's decision in the 1921 case New York Trust Co. v. Eisner upheld its constitutionality. In September 2001, the 5th U.S. Circuit Court of Appeals wrote in Jameson v. Commissioner of Internal RevenuePDF file, that “The Supreme Court has repeatedly rejected attempts to portray the estate tax as an unconstitutional direct tax.” In the unanimous opinion, the three-judge panel further ruled that "[b]ased on the variety of constitutional challenges to it that have been made and uniformly rejected, we see no basis for invalidating the federal estate tax."

From the June 7 broadcast of Westwood One's The Radio Factor with Bill O'Reilly:

O'REILLY: [T]he strain of socialism that runs through the Democratic Party is quite apparent. It's quite apparent in the death tax, which is unconstitutional. It's quite apparent in their consistent bashing of high wage earners. The New York Times every single day is like, “Punish the guys who make the money.”


So to try to portray the high-end wage earners as greed-heads, and because there was a tax cut, obviously the high-end end benefited from that tax cut. But we still pay much more tax than, you know, 50 percent of Americans don't pay any federal income tax now. Half of us don't pay any federal income tax. That means the other half is waging the whole war on terror. The other half is helping the Africans. Fifty percent of Americans, they're not paying anything. Come on. You want more than that? You want 10 percent to carry the whole load?

*This item originally stated that “All wage-earning Americans pay Social Security taxes.” In fact, while the vast majority of wage-earning Americans do pay Social Security taxes, a small number of workers do not, including some state or local government employees who contribute to a separate retirement system set up through their employer. A complete history of the workers' participation in the Social Security system can be found here.