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In an April 13, 2011, interview on NBC’s Today show, Rep. Michele Bachmann, R-Minn., offered a striking statistic describing how much of the tax burden in the United States is borne by the wealthy.
In the interview, host Matt Lauer cited a deficit-reduction plan offered by Rep. Paul Ryan, R-Wis., and asked why it included a major restructuring of Medicare but protected tax cuts for upper-income Americans.
"If that's on the table, then why shouldn't the burden be equally shared?" Lauer asked. "Why shouldn't we put some of that burden on the wealthy and corporations?"
Bachmann responded, "Well, remember, again, already the top 1 percent of income earners pay about 40 percent of all taxes into the federal government. So if you want to talk about fairness, the top 1 percent are paying 40 percent of all of the income."
We wondered whether she was right that "the top 1 percent of income earners pay about 40 percent of all taxes into the federal government."
The most recent hard data on this question comes from the 2007 tax year. It can be found in a Congressional Budget Office report released in 2010. CBO’s report shows what share of the federal tax liability was carried by various income groups. Here’s the rundown of the federal tax burden for the top 1 percent:
Federal income taxes: 39.5 percent share
Federal payroll taxes: 4.1 percent share
Federal corporate taxes: 57.0 percent share
Federal excise taxes: 4.7 percent share
Total federal tax share for the top 1 percent: 28.1 percent
So -- using 2007 numbers at least -- Bachmann is off by quite a bit. She’s even further off if you use an estimate for 2010 by the centrist to liberal Urban Institute-Brookings Institution Tax Policy Center, which pegs the share of all federal taxes for the top 1 percent at 22.7 percent.
Bachmann would have been right if she’d said, "the top 1 percent of income earners pay about 40 percent of all income taxes into the federal government." But she didn’t say that -- and even if she had, her decision to focus on income taxes, rather than looking at the whole federal tax picture, would have presented the numbers in such a way that wealthier Americans would look more heavily taxed than they are.
As a general rule, the burden of the income tax is tilted heavily toward the upper end of the income spectrum. The payroll tax burden is also tilted toward the upper end, but the payroll tax differential for rich vs. non-rich is not quite as great as it is for the income tax. For instance, the top 20 percent paid 86 percent of the income tax, but 42.9 percent of the payroll tax. Also, the Social Security portion of payroll tax applies only up to $106,800 in income. Meanwhile, the middle 20 percent of earners paid 4.6 percent of federal income taxes in 2007, but 16.6 percent of payroll taxes.
So for critics of taxes -- and Bachmann certainly is one -- it packs a greater wallop to cite income tax burdens for the wealthy than it does to cite their overall tax burden. But in this case, she didn’t define the statistic she was using correctly. So we rate her statement False.
Update: The original version of this story said, "Also, the payroll tax applies only up to $106,800 in income, with no tax on earnings above that limit." It should have noted that the income limit applies only to Social Security taxes.
Michele Bachmann, interview on NBC’s Today show, April 13, 2011 (transcript accessed via Lexis-Nexis)
Congressional Budget Office, "Shares of Federal Tax Liabilities for All Households, by Comprehensive Household Income Quintile, 1979-2007," accessed April 18, 2011
Urban Institute-Brookings Institution Tax Policy Center, "Share of Federal Taxes Under Current Law, By Cash Income Percentile, 2010," accessed April 18, 2011
Internal Revenue Service, "Individual Income Tax Rates and Shares, 2007" (article by Adrian Dungan and Kyle Mudry in the Statistics of Income Bulletin), winter 2010
Interview with Curtis Dubay, senior policy analyst at the Heritage Foundation, April 18, 2011
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