Beware of misinformation on taxes

It started with a simple statement from the president: “Middle-class families shouldn’t pay higher taxes than millionaires and billionaires.”The right wing exploded. The Union Leader said the president was being “disingenuous.” Syndicated columnist Deroy Murdock called the president a liar. Herman Cain also says, on his website, that the President was lying.Despite all the bluster on the right, they’re wrong. Let’s be clear about what the president was saying about taxes.First, President Obama was talking not just about income taxes, but about all federal taxes, including Social Security and Medicare taxes.Second, the president referred to tax rates, not the total taxes paid by a middle-class or wealthy family. He was not claiming that every middle-class family is paying more in taxes than every millionaire.Third, when the president talked about tax rates, he was comparing how much a person pays in taxes to that person’s total income.Wage earners pay a combined Social Security and Medicare tax rate of 7.65 percent. Those taxes do not apply to wages over $106,800. The income tax rate on middle income wages is 25 percent, but the income tax rate on stock dividends and capital gains (which are enjoyed primarily by the wealthy) is just 15 percent.If a middle-class person works some overtime to bring in an extra $1,000, he pays an income tax rate of 25 percent, plus another 7.65 percent for Social Security and Medicare. If a millionaire gets another $1,000 of income from dividends or capital gains, she pays 15 percent income tax, no Social Security tax and no Medicare tax.Despite these facts, Joe McQuaid of The Union Leader does his best to mislead. First, he quotes the Associated Press: “On average, the wealthiest people in America pay a lot more taxes than the middle class or the poor.”This quote proves nothing. Five percent of a million-dollar income is far more than what a middle class family pays in federal taxes, but that is not the point the president was making. The issue is the tax rate, not the tax bill of a millionaire compared to a middle-class family. Mr. McQuaid quotes the AP again: the wealthiest “pay at a higher rate.” On average, this statement is true, but the president was not talking about averages. He was talking about a tax code that allows many wealthy people to pay federal taxes at a lower rate than the middle class — including very wealthy people like Warren Buffett.President Obama is correct: Many middle-class families are paying federal taxes at a higher rate than millionaires and billionaires. A new report from the Congressional Research Service has found that one quarter of households with incomes over $1 million pay federal taxes at a lower rate than 10 million middle class families.On the issue of taxes, the right wing cherry-picks its information and changes the subject, in an effort to mislead. For that, the Union Leader, Herman Cain, and others owe us, and the president, an apology.Mark Fernald was the Democratic nominee for governor in 2002.

Categories: Opinion