I’m not so naive where I don’t understand that politicians bend the truth, make misrepresentations, selectively take things out of context, etc all in the name of politics. However, I see not even the slightest shred of truth in this.
Without making a single statement about the Buffett Rule itself, how is this “calculator” not just spitting out lie after lie to promote populist rage.
The basics of this are that you enter in your income, whether you are single, married, or married with kids, and then this calculator tells you what a typical household like yours pays in income taxes.
It then compares this rate to Mitt Romney’s effective tax rate for 2010 of 13.9%.
Here is a hint, as far as I can tell, it is impossible for this calculator to show a rate lower than Romney’s.
Here is another calculator that’s free from Turbo Tax.
The turbo tax calculator is obviously more complex, so I decided to only adjust income, single or married, and for kids I always put two kids under 16. Also, turbo tax doesn’t calculate an effective tax rate (it shows a marginal rate but no effective rate), so I just divide the tax calculated by income to determine the rate. Let’s make some comparisons.
Single with $20,000 income
Obama says 15.5%
Turbo Tax says 5.7%
Single with $40,000 income
Obama says 19.6%
Turbo Tax says 10.4%
Single with $100,000 income
Obama says 24.5%
Turbo Tax says 18.9%
Married (no kids) with $40,000 income
Obama says 16.4%
Turbo Tax says 5.7%
Married (no kids) with $80,000 income
Obama says 20.5%
Turbo Tax says 10.4%
Married (with kids) with $80,000 income
Obama says 16.6%
Turbo Tax says 6.5%
Married (with kids) with $120,000 income
Obama says 19.3%
Turbo Tax says 11.8%
Again, I used no deductions when calculating taxes with the Turbo Tax calculator, so the reality is that tax rates would be even lower than it shows.
Now, another nice trick about the Obama calculator is that if you put in a real low income, it always kicks out a rate of 20.6% saying this is what a middle class tax rate is. It doesn’t specifically state it is your rate, but clearly a lot of people would not catch on to that. So, if I say I am single with $10,000 in income, or married with $30,000 in income, or married with kids with $50,000 in income then the calculator just throws out a rate of 20.6%. Realize that the rate calculated by Turbo Tax for these scenarios is (-2.3%), 3.7%, and (-1.4%).
Of course I have no idea how they think a middle-class tax rate is 20.6%. Here is a link from the Tax Policy Center on effective tax rates by income category.
So, obviously it is difficult to say what counts as middle class. I’m going to make a real broad category and say that we should look at this in quintiles calling bottom quintile lower class, top quintile upper class, and the middle three quintiles as middle class. This would of course have 60% of American’s as middle class, but nevertheless, the effective tax rate for those three middle quintiles is (-4.2%), 4.1%, and 8.2%. The top quintile is 17.3%. The highest 95% - 99% of income earners is at 19.2%. How in the world does Obama say a middle-class tax rate is 20.6%?
So, here we are. I am pitting Obama for lying. There is no bending of facts here. This is not a slip of the tongue in a speech. He’s not picking out certain statistics that misrepresent. He has designed his website specifically to lie.
My question for supporters of Obama and this Buffett Tax Proposal, if it is such a good idea, why does he have to blatantly lie to promote it?
Anyone care to disagree?