Another "what Obama could have said, and we hope he will" diary.
It made me so mad during the debate when Romney said:
The top 5% of taxpayers will continue to pay 60% of the income tax the nation collects. So that'll stay the same.
I'm sure he got help from Frank Lutz or his acolytes, to make it sound like the "top" Americans bear oh-so-much of the tax "burden". But the correct reply should have been:
The richest 5% only pay 35% of income taxes, even though they own more than 70% of the wealth in this country. That's only half their fair share!
Follow me below for the three key talking points (and the choicest numbers).
First point: Get your damn numbers straight.
The 95th to 99th percentile don't pay 60% of Federal income taxes, but 40% – even according to the Heritage Foundation.
For a numbers-guy / business-guy, that's an odd mistake for Romney to have made.
(The Center for Tax Justice has slightly different numbers, with the top 5% paying just 35% of all income tax collected.)
Second point: Don't just talk about income taxes (but it doesn't really change the picture)
Of course, we all pay a lot of taxes besides just the Federal income tax. Here's Ezra Klein “one tax graph you need to know”:
http://www.washingtonpost.com/...
So what percentage of all taxes do the top 5% pay? It's actually slightly higher, 37%.
Main point: What's a “fair share” of taxes?
Most folks asking if the wealthy are paying their fair share, look at tax rates. But for every bracket from the middle class to the ultra-rich, on average everyone pays between 25% and 30%.
(Romney's only paying 14% – but that's his Federal income tax only. He's refused to release his state tax returns, along with anything beyond a measly 2 years of his Federal returns, so we can't say for sure what his total is for all taxes.)
It's hard to believe the rich could be moaning and groaning, when if anything, their total tax rate is a little lower, the richer you get. Not to mention the exceptions, like (probably) Romney, who make out like bandits.
Another way to judge “fair share” is, what percentage of total income to the different brackets get? Again, that same chart shows that the top 5% has got nothing to kvetch about – they may pay 37% of all the tax collections, but they also get 35% of all the income. Not bad, for the people who could most afford to pay a little more.
But really, it's not right to compare tax burden to earned income. The wealthiest Americans have a lot of ways to hide that income. And unlike “real America”, most of the income they receive isn't really earned in the traditional sense. It's mostly returns on the wealth they already have – that is, they don't bother to do the work themselves, they let their money work for them.
So let's compare instead to how much of the wealth is owned by the top 5% – and that's a whopping 72%.
That's how we can restate Romney's point, the right way (thanks, Frank Lutz):
The richest 5% only pay 35% of income taxes, even though they own more than 70% of the wealth in this country. That's only half their fair share!
Final point: Don't prolong the unfair Bush tax giveaways
That tax “burden” (boo-hoo) for the wealthy – is with the temporary Bush tax cuts still in place. Romney wants to keep that burden as light as possible, so his starting point is the cushiest possible situation for his tax bracket. And then, whoopty-doo, he does the rest of us the favor of saying he'll keep it there (which he really won't, but that's another diary...).