David Leonhardt Punctures Right-Wing Tax Myths

Last week the Drudge Report flagged an Associated Press report (4/5/10) by Stephen Ohlemacher with the headline: “Rob Thy Neighbor: Half of American Households Pay No Fed Income Tax.”

The piece in questionsaid more or less the same, making it a popular item for right-wing pundits eager to pounce on tax freeloaders. But the AP article was problematic right from the start: “Tax Day is a dreaded deadline for millions, but for nearly half of U.S. households it’s simply somebody else’s problem.”

Ohlemacher later elaborated:

The result is a tax system that exempts almost half the country from paying for programs that benefit everyone, including national defense, public safety, infrastructure and education. It is a system in which the top 10 percent of earners–households making an average of $366,400 in 2006–paid about 73 percent of the income taxes collected by the federal government.

The piece leaves out some crucial context–namely, how the wealthy have fared in recent years. If you’re going to point out that they’re carrying much of the income tax burden, you might want to note that could have something to do with how much they’re earning.

New York Times business columnist David Leonhardt (4/14/10) writes a valuable corrective to this today, pointing this out:

Over the last 30 years, rates have fallen more for the wealthy, and especially the very wealthy, than for any other group. At the same time, their incomes have soared, and the incomes of most workers have grown only moderately faster than inflation.

So a much greater share of income is now concentrated at the top of distribution, while each dollar there is taxed less than it once was.

The headline figure touted by AP and Drudge–that 47 percent pay no federal income tax–is a “distraction,” writes Leonhardt. And while it might be true when it comes to income taxes, it misses the point when it comes to the overall tax burden:

Congressional Budget Office data suggests that, at most, about 10 percent of all households pay no net federal taxes. The number 10 is obviously a lot smaller than 47.

About Peter Hart

Activism Director and and Co-producer of CounterSpinPeter Hart is the activism director at FAIR. He writes for FAIR's magazine Extra! and is also a co-host and producer of FAIR's syndicated radio show CounterSpin. He is the author of The Oh Really? Factor: Unspinning Fox News Channel's Bill O'Reilly (Seven Stories Press, 2003). Hart has been interviewed by a number of media outlets, including NBC Nightly News, Fox News Channel's O'Reilly Factor, the Los Angeles Times, Newsday and the Associated Press. He has also appeared on Showtime and in the movie Outfoxed. Follow Peter on Twitter at @peterfhart.