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Editor's note: On Sept. 13, 2011, we checked Wasserman's Schultz's claim that it's not true that 50 percent of Americans don't even pay any federal income tax. But we broadened this fact-check on Sept. 16, after her spokesman said she was referring to the other portion of Wolf Blitzer's statement.
Before the Republican candidates for president took center stage in Tampa on Sept. 12, 2011, for the CNN/Tea Party Express debate, Democratic National Committee chairwoman and Florida Rep. Debbie Wasserman Schultz talked with CNN's Wolf Blitzer -- and the conversation quickly turned into a back-and-forth over taxes.
Blitzer tried to make the point that wealthy Americans might already pay the most taxes, while Wasserman Schultz countered that their tax rates are the lowest they've been since the 1950s. We watched the ships pass in the night.
The lead-in was about President Barack Obama's jobs bill, and how Republicans seem steadfastly opposed to raising any tax on anyone. Here's what followed:
BLITZER: All right, we don't have to debate the whole issue of taxes and wealthy and all of that. (But) the wealthiest Americans, they pay the most in taxes already -- 50 percent of Americans don't even pay any federal income tax, because ...
WASSERMAN SCHULTZ: No, that's actually not true, Wolf.
BLITZER: Fifty percent, you don't ...
WASSERMAN SCHULTZ: We're at the low -- in terms of the wealthiest Americans, we're at the lowest tax rate since the 1950s.
BLITZER: I know, but they pay a huge chunk of the federal income tax, the wealthiest Americans. The top 2 percent or 3 percent pay whatever that number is, 30 or 40 percent.
WASSERMAN SCHULTZ: But they're still at the lowest tax rate since the 1950s.
BLITZER: Yes, 35 percent.
WASSERMAN SCHULTZ: And there have been significant tax breaks from President Obama.
BLITZER: All right. We're not going to get into all of that.
Blitzer cut cut off the debate there -- and we picked it up. Originally, we measured Wasserman Schultz's assertion that Blitzer was wrong to say that "50 percent of Americans don't even pay any federal income tax."
But we then heard from Democratic National Committee spokesman Brad Woodhouse, who told us that Wasserman Schultz's objection to Blitzer -- "No, that's not actually true, Wolf" -- wasn't in response to his statement about the 50 percent of Americans who don't pay federal income tax (despite what it might have sounded like to viewers). Instead, she was arguing against his claim that "the wealthiest Americans, they pay the most in taxes already," he said.
Since it's impossible to say exactly which part of the statement she was disagreeing with, we decided to check both.
(In another item we examined Wasserman Schultz's claim that the wealthiest Americans have the lowest comparative "tax rate since the 1950s." We found that Mostly True.)
To keep it simple, we'll break this fact-check into two parts. First we'll look at whether the wealthiest Americans pay the most in taxes. Then we'll examine whether 50 percent of people pay no federal income taxes at all.
What the wealthy pay in income taxes
Blitzer explained his statement about the wealthy's tax burden by saying, "they pay a huge chunk of the federal income tax, the wealthiest Americans. The top 2 percent or 3 percent pay whatever that number is, 30 or 40 percent."
Just how big is that chunk?
As PolitiFact has reported, 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 shouldered by various income groups. We'll show you the information in a chart.
The top line of the chart groups households by income: The first five columns break down taxpayers in five equal groups, poorest to richest. The last three columns focus solely on the wealthiest Americans. Blitzer first said the wealthiest Americans "pay the most in taxes," then clarified "federal income tax." So we've provided a breakdown of both total federal taxes, in the top row -- which also includes Social Security taxes, corporate income taxes, and taxes on goods like gas, tobacco and alcohol -- and in the bottom row, federal income tax.
Share of federal taxes in 2007
|Lowest quintile||Second quintile||Middle quintile||Fourth quintile||Highest quintile||Top 10%||Top 5%||Top 1%|
|Share of total federal tax liabilities||0.8%||4.4%||9.2%||16.5%||68.9%||55%||44.3%||28.1%|
|Share of individual income tax liabilities||-3.0%||-0.3%||4.6%||12.7%||86%||72.7%||61%||39.5%|
Blitzer said, "they pay a huge chunk of the federal income tax, the wealthiest Americans. The top 2 percent or 3 percent pay whatever that number is, 30 or 40 percent." The most recent CBO report shows that just the top 1 percent of households paid nearly 40 percent of income taxes. Meanwhile, their share of total federal tax liabilities was nearly 30 percent.
For a more recent look, we have to rely on estimates based on 2010 law by the nonpartisan Urban Institute-Brookings Institution Tax Policy Center. They show the top 1 percent paying 32 percent of federal income taxes and 22 percent of all federal tax.
That means, if anything, Blitzer's statement about the top 2 or 3 percent's income tax burden may be conservative — he's on the mark just for the top 1 percent.
Meanwhile, Wasserman Schultz responded not with information about share of taxes paid, but with arguments about tax rates. Indeed, Woodhouse provided us with four articles, three of which focused on tax rates, and a fourth that looked at Americans' total tax burden falling as a share of the economy. None of them proved false Blitzer's claim about the size of the wealthiest's share of the tax burden.
Instead, they made a separate observation -- that while the wealthy may pick up a bigger percentage of the federal tab, they're paying a smaller percentage of their income. It's a strong point, but it doesn't make Blitzer's statement any less true.
How many people pay no federal income taxes
When it comes to the number of people not paying federal income taxes, Blitzer is pretty close to right.
The Joint Committee on Taxation, a respected bipartisan committee of Congress found that in 2009 roughly 22 percent of "tax units" ended up paying nothing.
Another 30 percent actually got money back from the government — meaning they made money — through mechanisms such as the Earned Income Tax Credit, a longstanding policy that encourages low-income Americans to work by refunding money through the tax code.
The caveat here is that the statistic is measured in "tax units" — which is people or families who file tax returns. (The calculation will exclude some people, but not, for instance, people who receive unemployment benefits. The Internal Revenue Service considers that taxable income.)
How did we get to the point where most Americans don’t pay federal income taxes? The main reason is that the United States employs the tax system not just to collect funds but to distribute them as well.
Bob Williams, a tax policy specialist at the Urban Institute-Brookings Institution Tax Policy Center, told our colleagues at PolitiFact Virginia this is largely carried out through popular tax breaks, which are sometimes called "tax expenditures."
"There are lots and lots of them," he said. "We estimate they total more than a trillion dollars a year in reduced taxes, and in fact the bulk of those go to the top end of the income distribution."
However, because high earners have so much income liability, the breaks they get still don't whittle their taxes down all the way to zero. By contrast, popular lower- and middle-income breaks such as child credits and mortgage interest deductions do get a big share of the population off the hook.
To be fair, we wanted to see if there are more up-to-date figures. The Urban-Brookings Tax Policy Center said the number actually has dropped slightly -- and that 49.5 percent of tax filers ended up paying nothing in federal income taxes in 2010. In 2011, the predict the number might drop even more, down to 46.4 percent .
During a back-and-forth between Blitzer and Wasserman Schultz, Blitzer said that "the wealthiest Americans, they pay the most in taxes already -- 50 percent of Americans don't even pay any federal income tax."
Wasserman Schultz responded by saying "that's actually not true."
But both of Blitzer's points are valid. About half of tax filers pay no federal income tax at all, and the wealthiest Americans -- though they may have a lower rate than they did in the 1950s -- still pay a huge chunk of federal income taxes.
We rate Wasserman Schultz's claim False.
CNN, Transcript from CNN/Tea Party Express Debate, Sept. 12, 2011
E-mail interview with Brad Woodhouse, communications director for the Democratic National Committee, Sept. 13-15, 2011
PolitiFact Florida, "Debbie Wasserman Schultz says tax rates lowest since the 1950s for wealthy Americans," Sept. 13, 2011 (Mostly True)
PolitiFact, "Michele Bachmann says top 1 percent pay 40 percent of all federal taxes," April 18, 2011 (False)
Congressional Budget Office, "Shares of Federal Tax Liabilities for All Households, by Comprehensive Household Income Quintile, 1979-2007," accessed Sept. 15, 2011
Urban Institute-Brookings Institution Tax Policy Center, "Share of Federal Taxes Under Current Law, By Cash Income Percentile, 2010," accessed Sept. 15, 2011
Joint Committee on Taxation, letter to Congress, April 29, 2011
Urban Institute-Brookings Institution Tax Policy Center, "Historical Effective Federal Tax Rates for All Households," accessed Sept. 13, 2011
PolitiFact, "Barack Obama says tax rates are lowest since 1950s for CEOs, hedge fund managers," June 29, 2011 (Mostly True)
PolitiFact Virginia, "Eric Cantor says almost 50 percent of Americans don't pay income taxes," May 9, 2011 (True)
PolitiFact Rhode Island, "Whitehouse says richest 400 taxpayers are taxed at a lower rate than a $29,000-a-year worker," Feb. 25, 2011 (Mostly True)
PolitiFact, "Trent Franks says top 1 percent pays over half of the entire revenue for the U.S.," July 9, 2010 (False)
Forbes, "The 400 Richest Americans Pay An 18% Tax Rate," July 25, 2011
USA Today, "U.S. tax burden at lowest level since '58", May 6, 2011
Washington Post, "Capital gains tax rates benefiting wealthy feed growing gap between rich and poor," Sept. 11, 2011
PolitiFact, "Barack Obama says tax rates are lowest since 1950s for CEOs, hedge fund managers," June 29, 2011
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