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One theme U.S. Sen. Kamala Harris sounds in her 2020 presidential campaign is that "justice is on the ballot." The California Democrat did so repeatedly in a Facebook video ad, which leads off with this claim:
"In America, there is a father who is holding down two jobs and paying more taxes than the richest 400 families in America."
Her statement is based on a study that produced startling headlines, such as one in the Washington Post: "For the first time in history, U.S. billionaires paid a lower tax rate than the working class last year."
But Harris misfired by making her claim about taxes paid instead of tax rates. Also, the study, while produced by two prominent economists, makes estimates based on assumptions that are not universally accepted among economists.
The study, published as a book about a month before Harris’ claim, was done by leading economists Emmanuel Saez and Gabriel Zucman of the University of California, Berkeley, whose work PolitiFact has relied on for previous fact-checks.
Harris’ campaign told us Harris was referring to rates, even though that isn’t what Harris said.
The study said that in 2018, the average effective tax rate paid by the bottom half of American households was 24.2% — a full percentage point higher than the 23% rate paid by the 400 richest families.
As the book puts it, "the Trumps, the Zuckerbergs and the Buffetts of this world pay lower tax rates than teachers and secretaries."
So, to use Harris’ example, a typical father with two jobs pays a higher tax rate than the richest 400 American families — according to one study by prominent economists.
That’s not the same as paying more taxes.
Indeed, an individual with $1 million in taxable income would pay roughly $230,000 in all federal and state taxes, Howard Gleckman, a senior fellow at the nonpartisan Tax Policy Center, told us. Someone with $50,000 in taxable income would pay about $12,000.
Moreover, the study Harris relied on makes estimates for 2018, and its methodology has come in for criticism from some economists.
That isn’t to say that the study is wrong or that the critics are right. But the picture isn’t as clear as Harris’ statement suggests.
Federal tax data for 2018 were not available, so the Saez-Zucman study had to do extrapolations, Gleckman wrote in a critique of the study. That is "no easy feat," because of fundamental changes made by the 2017 Republican tax cuts; plus, the study excluded certain federal tax credits received by lower- and middle-income people.
The upshot, according to Gleckman:
Incomes of the very rich are rising faster than for all other income groups, and Trump’s tax law cut the taxes of high earners by more on average than for low- and moderate-income households; "but that doesn’t mean that billionaires paid a lower tax rate than the working class."
The Saez-Zucman study, they wrote, "rests on several unconventional methodological assumptions which, in our opinion, biases the outcome towards finding relatively lower tax rates on the wealthy compared to the poor and overstates the decline in top earners’ tax burdens."
David Splinter, an economist at Congress’ Joint Committee on Taxation, also found fault with the Saez-Zucman study’s methodology and conclusion that tax rates are nearly equal for people at opposite ends of the income scale. The joint committee, the Tax Policy Center, the U.S. Treasury, the Congressional Budget Office and economists all have found that federal taxes are progressive, he wrote in a critique of the study.
The study’s assumptions, Tax Foundation economist Erica York told us, "go against the widely-accepted methods that exist for determining tax burdens, without providing a convincing reason for doing so."
Saez referred us to a frequently asked questions web page that explains the study’s rationale and addresses some of the criticism.
University of Wisconsin-Madison economist Andrew Reschovsky praised the study, but called Harris’ claim misleading.
"In dollar terms, the father holding down two jobs is certainly paying less in taxes than the taxes paid by the richest families," Reschovsky told us. "What Harris should have said, is that the father holding down two jobs is paying a larger share of his income in taxes than the average richest families are paying in taxes relative to their incomes."
But, again, that scenario comes from a study that is in some dispute.
Harris said, "In America, there is a father who is holding down two jobs and paying more taxes than the richest 400 families in America."
The study Harris relies on estimates that a typical taxpayer pays a higher tax rate on federal, state and local taxes — not that he pays more in actual taxes — than do the richest families. And even on rates, the difference is not especially large: 24.2% vs. 23%.
That’s important because, while the study was done by leading economists, it relies on estimates and a methodology that some economists say makes the tax system look less progressive than it actually is.
Most critically, there is nothing in Harris’ ad that suggested she was talking about tax rates rather than taxes paid.
For a statement that contains only an element of truth, we give Harris a Mostly False.
Facebook, Kamala Harris "Justice is on the ballot" ad, Nov. 13, 2019
Email, Kamala Harris campaign spokeswoman Kate Waters, Nov. 19, 2019
Email, Emmanuel Saez, professor of economics and director of the Center for Equitable Growth, University of California, Berkeley, Nov. 19, 2019
Washington Post, "For the first time in history, U.S. billionaires paid a lower tax rate than the working class last year," Oct. 8, 2019
Forbes, "Are US Billionaires Really Paying A Lower Tax Rate Than Working People? Probably Not," Oct. 11, 2019
Email, Cato Institute director of tax policy studies Chris Edwards, Nov. 20, 2019
Email, Howard Gleckman, senior fellow at the nonpartisan Tax Policy Center, Nov. 20, 2019
DavidSplinter.com, "U.S. Taxes are Progressive: Comment on ‘Progressive Wealth Taxation,’" Oct. 8, 2019
"The Triumph of Injustice: Frequently Asked Questions," accessed Nov. 19, 2019
Bloomberg Tax, "Insight: The Failure of ‘The Triumph of Injustice'—Understating Taxes at the Top and Incomes at the Bottom," Oct. 30, 2019
Email, Tax Foundation economist Erica York, Nov. 19, 2019
Email, Andrew Reschovsky, University of Wisconsin-Madison professor emeritus of public affairs and applied economics and faculty affiliate at the Institute for Research on Poverty, Nov. 19, 2019
Email, Manhattan Institute senior fellow in budget, tax and economics Brian Riedl, Nov. 19, 2019
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