The Effective Tax Rate Lie
It’s really annoying that the media likes to play games with the effective tax rate people pay versus the tax bracket they are in. This trick is most often used with the “Buffet Rule” that claims Buffet pays less tax than his secretary. Now we could get into making money from investments instead of a paycheck but I want to focus in on the secretary. The claim is that middle class people pay their tax bracket. This is BS. We know that you pay different tax percentages on different amounts of income. So the magic number that matters is what your effective tax rate is. To claim that a secretary pays 25% or more on a 50,000-ish salary is such Bullsh I can’t even begin to understand how this lie perpetuates itself. And let me make one thing clear also, we are talking about the Federal tax rate. Not the total effective tax rate you have when you roll in state taxes (which vary widely state to state).
So now we have Obama reporting that he paid 18% in taxes. He is getting criticized from the right which is probably fair since he criticized Romney. But like Romney I imagine his rate is a lot lower because he gives a lot to charity seeing as how he has NO expenses whatsoever. So 18% is not shocking to me at all on 600k income. But to act like middle class people are paying more than that is ridiculous. I have never paid more than maybe 13% on income just over a 100k, filing jointly. And I have very little in the way of deductions. I would suspect that most middle class filing jointly under 100k are in a similar boat, < 15% total federal effective tax rate. I don't understand this lie that people are paying the full tax rate of the highest tax bracket they are in.
This is the stupidest misleading lie that the media puts out there.