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In order to keep up with the nature of free, spirited debate, I wanted to place the chat feature at the top of the homepage. This ensures people can come here and share their views on anything they wish and not have it be related to any specific discussion. Here, people can share ideas, links, and views "unmoderated" and an their own pace. To me, this makes The Elephant in the Room blog truly a place for debate.

Sunday, February 5, 2012

Exploring a Tax Myth - What Tax Rates do the Middle Class Pay?

I hope the readers of the blog don't think this is becoming redundant, but I cannot stand by while people live in a world of myth. People can vote for whomever they want, but I am worried that the things people believe in and use as a basis for voting can be factually wrong. To me, voting without truth is dangerous. If you're going to vote democrat or republican, that's fine. Just please know the facts about the information you care about.  I hope to help people learn things. I hope to help people dispel myth and see the truth. Recently, I think the biggest thing that gets under my skin the most is this myth about middle class vs. millionaires' tax rates. See below:

Last night, I received a Tweet (this blog has a Twitter account @lmelephantblog) from someone who did not like our conservative viewpoint. I had tweeted that Mitt Romney won the Nevada Caucuses and used the hashtag @MittRomney in my tweet. He obviously monitored Romney's twitter and decided to message me. His information is blacked out, but the message is clear:

An income of $57,000 causes someone to pay 28% in taxes?! What?! Of course, I responded that this is just not true. I responded that he should look at some information, and I sent him he link to one of our many write-ups about this. I even sent him the following graph and tried to explain in 140 characters or less how marginal tax brackets worked.

In spite of seeing an IRS data table, CRS analysis, the wikipedia article highlighting the exact U.S. tax brackets for 2011, and a personal example, the truth didn't seem sink in. When I woke up today, I wanted to investigate. Not only did I want to see what tax rate a $57,000 income would cause someone to pay, I wanted to see how much income would be needed to pay an effective rate of 28%.

I turned to Microsoft Excel (you know I just love Excel tables) to help with the analysis. First, allow me to establish some givens:

- I will use the most conservative estimate I can to make sure (though unrealistic) each taxpayer pays the maximum amount. This means:
               - No deductions
               - No write-offs
               - Neither taxpayer will receive a refund of any kind
               - Each taxpayer will pay the pre-payroll tax holiday tax rate of 7.65% total (6.2% for SS and 1.45% for Medicaid taxes)

The math is quite simple. Please see the results:

So what does all this mean? Well, I have concluded:

               - Someone that makes $57,000 of total income pays a final effective tax rate of 25.85%
               - It would take an income of $83,250 to pay a final effective tax rate of 28.00%.
               - Again, these tax rates are WITHOUT deductions. Normally, people making between $57K and $83K would have children, houses, and other write-offs and deductions, making their effective tax rates even lower. I make $53k (now current salary) and my tax rate was less than 14%. See my tax information at this post:
               - The twitter commenter was $26,250 or 46% too high.

What do YOU think? Is this analysis off? Is this the truth? All comments are appreciated.


  1. Just stop. Stop using real information. Stop trying to use facts. It will disorient the left.

    1. Lol, dude is right. You gotta stop this. Facts to a liberal are like garlic to a vampire.

  2. Tell yourself whatever you want. Nobody else is buying this bullshit.
    You must either be very rich yourself OR a political LAPDOG for your masters.

    Enjoy your "Fun with Fake Numbers"

    1. Perhaps this is the difference between the left and the right. We take a position and back it with analysis, studies, empirical evidence, etc. You come here and make accusations and fight our opinion with more myth.

      Care to actually back what you say? We took a position; we gave the reasons we have that position.

      How are our numbers fake? We give cited Wikipedia info and you can fact-check our math. So... How is this fake?

      Lapdogs? Paid? Nope. Again... Back this claim.

      We truly think it's sad to live in that kind of world; one where you believe things you can't prove and base opinions on myth and unbacked fantasies. Having an opinion without being able to prove it... isn't that the definion of... ignorance? Hopefully you can come back and give an intelligent, articulate, fact-based rebuttal to our views. Thanks!

    2. What did liberals do that was so offensive to the Republican party? I'll tell you what they did. Liberals got women the right to vote. Liberals got African-Americans the right to vote. Liberals created Social Security and lifted millions of elderly people out of poverty. Liberals ended segregation. Liberals passed the Civil Rights Act, the Voting Rights Act. Liberals created Medicare. Liberals passed the Clean Air Act, the Clean Water Act. What did conservatives do? They opposed them on every one of those things every one. So when you try to hurl that label at my feet, 'Liberal,' as if it were something to be ashamed of, something dirty, something to run away from, it won't work, Senator. Because I will pick up that label and I will wear it as a badge of honor."

    3. LME should have worded that last sentence differently.
      instead of--

      "What do YOU think? Is this analysis off? Is this the truth? All comments are appreciated."

      I think he meant--

      "You all agree with me no matter what ! I don't care if you don't believe me ! All comments will be attacked!"

    4. Actually, it's more like: these are our positions. We back what we say. It's a topic for debate. You can have any opinion you like; that's your right. We can have any opinion we want of your opinion... that's our right. If you back what you say, that's great; we all might learn something. If not, fine. It doesn't really help the debate. We will always ask for backing... If you stop in just to make unbacked accusations, we will challenge them.

      So... First, we took a position. All those topics brought up about liberal legislation really didn't have anything to do with our post.

      Can anyone show how we are lap dogs? Apparently if we have a position and you don't agree, forget an intelligent rebuttal, just make accusations.

      Keep in mind, no one has actually refuted our position yet. Thanks.

    5. Actually Lincoln, a republican, freed the slaves. George Wallace, a democrat, strongly opposed the civil rights movement, as did LB Johnson.

      Your argument actually doesn't help our, the demcrat, cause.

    6. I'm sorry Anonymous, the facts just do not seem to support your claim. For instance, Women's and Blacks rights to vote were Constitutional Amendments requiring not only House and Senate passage but Ratification by the states.

      Women obtained the right to vote in spite of Democrats. The vote passed the Senate 56-25. While 82% of Republicans (36 of 44) voted for women's right to vote only 54% of Democrats (20 out of 37) voted for it. The House vote was 304-89. The make up of the House in that year was 242 Republicans, 192 Democrats, 1 Prohibitionist, 1 Union-Labor. Then the states had to ratify it.

      Blacks obtained the right to vote in spite of the Democrats. As I said before, it was a Constitutional Amendment.

      The Civil Rights Act of 1964 passed in spite of Democrats.

      By party

      The original House version:

      Democratic Party: 152-96 (61%-39%)
      Republican Party: 138-34 (80%-20%)

      Cloture in the Senate:

      Democratic Party: 44-23 (66%–34%)
      Republican Party: 27-6 (82%–18%)

      The Senate version:

      Democratic Party: 46-21 (69%–31%)
      Republican Party: 27-6 (82%–18%)

      The Senate version, voted on by the House:

      Democratic Party: 153-91 (63%–37%)
      Republican Party: 136-35 (80%–20%)

      In fact Democrats filibustered the vote led by Richard Russell (D-GA) and Robert Byrd (D-WV). Robert Byrd was in the KKK and a lifelong Democrat. Al Gore Sr. also opposed the Civil Rights Act of 1964.

    7. 32slim32 - Good morning!

      Wow, it seems like you did your homework on this. Where did you find this info?

    8. Well, I had researched the Civil Rights Act of 1964 vote before. The vote info came from Wikipedia, I believe. I knew that the Blacks and women were granted the right to vote because I have actually read the Constitution (something I would bet the Anonymous poster has never done). It's a little hard to pass a Constitutional Amendment without some bi-partisan support.

    9. Nice, 32slim32! Using citable information to back a position, in my opinion, is always the way to go.

  3. LAPDOG ! Haaaaa ! SO TRUE !

    1. How? These are valid points. Im a democrat at the heart and i agree with this. You should read through this blog. I ve been coming here for a while and i think its a good place for dems n reps to come together.

  4. Dont hold your breath for an intelligent rebuttal, you post a good point, you show numbers simple math, no one is able to refute it. They just make accusations and call names. How can the left and right meet if when given the opportunity to debate and learn this is what they do?

    1. To be completely fair, this is what many people on _both_ sides do. :)

      As such continues the endless loop of he-said/she-said/they-said/finger-pointing fun.

  5. 32slim32 - You know what is funny?

    We put up a post. We have a position. We give our reasons. We hope people would come to engage in a thoughtful debate. If they agree, there isn't much more for them to say or prove. But for those that disagree, we hope they would say something like "I disagree with your analysis because ______," or "I feel you are incorrect because it's really like this and that."

    Amazingly, here we are, 13 comments in, and no one has done that. I have been accused of being very rich (again, a statement based on nothing) though my tax information is here and shows I'm not:

    The term "lap dog" has been thrown around here... I'm not sure how that would be the case. I've been accused of being a "puppet," and, of course, my numbers have been accused of being fake though I cite the US tax brackets and where I got the information from. Perhaps somehow I made up the $57,000 number? Maybe it's just a fake number. Either way, my point is... this is truly sad when people come in here to shoot down an argument in that way. I was hoping to see someone come in with a new idea or something that is backed with fact so we can all learn something. I am still hoping...

  6. Those that come here to bad mouth or claim your numbers are fake are only doing this because you have checkmated them. I checked your math and the numbers are good. You used real tax rates and your final tax rate number for someone making $57K is correct. You put them into a corner where they cannot shoot down your article. I commend this.

  7. I don't need to double-check your numbers to know that your point here is valid. I'm "from the left" and these half-truth fabricated statistics bug the crap out of me whether they come from the left or the right. The right makes similar lazy/convenient/not-so-true soundbytes when they say things like "half of Americans pay no taxes". Part of the problem is that any statistic needs to be boiled down to a trite sound-byte in order to gain significant traction in our lazy media and our no-attention-span culture.

    1. James - Thank you. Thank you for coming by and giving your opinion. Yes, I agree: this is done on both sides. Just as we commented to someone on Twitter today, we believe:

      "@wi_defender We don't like myths and accusations regardless if they are from dems or republicans. We just seek truth in all avenues."

      For example, though it existed before our blog, we were against the "birther" movement. After Obama released his birth certificate, those on the right still questioned it even after the truth/data came out.

      Our case is the same here. The tweet it the first picture above was sent to our Twitter page, and we just wanted to dig into it (we actually knew the answer, but felt it would make more sense to back it with numbers). If people have a problem with it, that's fine. We are always open for civil debate. To come in here and call the numbers "fake" as some have doesn't really hold water. If people want to debate us on methods, principles, etc... that's totally fine.

      At the end of the day, we just believe in truth. Personally, I think this constant blathering in the media about tax rates is getting a little out of hand. It seems like this is a topic many people talk about without knowing the truth. That tweeter above claimed a $57k income has a 28% tax rate burden. It's simply not true. People make claims that aren't true about Mitt Romney's time at Bain, just as people on the right make claims about Obama being a Muslim (which wouldn't be anyone's business anyway, but, regardless, the claim isn't true either). We just strive for truth, and if we can help someone learn something, in this case tax rates, that's a success to us.

      Thank you again. With you being self-described as from the far left, we hope you come back and participate in our forums. They are a great way for both sides to discuss the issues and learn something. We don't all have to agree, but sharing info peacefully helps everyone understand everyone else.

    2. James - Real quick.

      After I replied, I reread your post... You said:

      "I don't need to double-check your numbers to know that your point here is valid. I'm "from the left" and these half-truth fabricated statistics bug the crap out of me whether they come from the left or the right."

      I just wanted to make sure I understand that you don't think our article is "half-truth fabricated"... you were referring to the Twitter post? Right. Either way, it's cool... but I wanted to make sure I understood your point.

      Please excuse the slowness... it is Monday :-P

  8. While your analysis is correct, it does nothing to refute the argument. If I make 100k, I'm still middle class and I'm still paying higher taxes than Romney.

    I don't care about cap gains as much as carried interest. Carried interest, the income of hedge fund managers and private equity executives, needs to be considered ordinary income.

    We need to balance the budget and with Medicare and social security costs on the rise due to our aging demographics, we need more revenue.

    Twitter twitter: @bourgeoiz

    1. @bourgeoiz - Thank you for your input!

      With regards to my argument, I simply wanted to point out that many Americans have an opinion that is not based on real-world information. The tweet I received said that someone making $57k per year got taxed at 28% and I wanted to show how, from my viewpoint, this was not true.

      With regards to Mitt Romney, if you're in the middle class paying a greater rate, you might be an exception to the rule. I'm not doubting your personal situation, but data shows this, for the 104,000,000 middle-class taxpayers, isn't true. We have written about this extensively and shown that in spite of what the media tells people, it's a very rate case that the middle class pays a greater overall tax rate than millionaires. Yes, this does exist, but we feel this is very rare, and it shouldn't be broadcast as the norm:

      Our write-up about Obama's speech in Kansas using the CRS analysis of the Buffett rule:

      Our piece about Mitt's tax rate versus the average rate of the middle class:

      Our piece about Mitt's tax rate relative to my personal tax rate (yes, like most middle-income taxpayers, I have about 21% taken out of my paycheck each week, but yes, like most Americans, I have a mortgage and significant other write-offs to reduce my overall taxes paid... people often forget this):

      Our write-up that uses IRS data to show that the average middle-income tax rate is significantly lower than the media portrays:

      You are personally taking to someone who believes in a flat-rate tax system. I don't believe a system that points to two taxpayers and says, "you, taxpayer A, your rate is 25%, while, you, taxpayer B, your rate is 10%" is fair. I don't think I will ever understand how that is "fair." I think income should be taxed at the same flat rate for all... no deductions, no write-offs, no loopholes. I also find it stunningly embarrassing that we have to turn to the rich to fund our government. I don't turn to my neighbor and say "hey, pay my water bill, you make more money than me" so why should I request that neighbor to pay for my roads, military, etc? These are just my personal opinions, and I appreciate you stopping by to share yours. I hope to hear more. Thank you.

  9. Actually, your math understates the reality slightly.

    You did note that you didn't include deductions to get the maximum figure, but the actual fact of the matter is that the maximum figure will always include at the very least a standard deduction and one exemption.

    It doesn't matter who, what situation, or where... you are guaranteed a standard deduction (currently $5,800) and one exemption ($3,700).

    Which, actually brings the tax liability down to $12360.5 (or 21.69% of the $57k in income).

    Now though, you see why in the other post I mentioned that I still paid over 20% of my income in taxes? :) I have no deductions I can claim other than the standard and one exemption. If I could deduct more, I could of course lavish in a lower rate (but not everyone can).

    But, as another poster before me pointed out, the resounding point here that people (‘particularly liberals’) are arguing on this topic is that a millionaire shouldn't have a lower effective tax rate than any middle class worker. The actual numerical differences don’t matter so much as the fact it actually happens.

    And while that may be uncommon or even rare, it still just shouldn't exist. Just like a conservative may argue that welfare recipients using gov money to buy illegal drugs, though uncommon/rare, shouldn't exist.

    1. RKen - Good evening! I hope you had a great weekend.

      I appreciate your opinions. You are very level and clear in your thoughts, and you are always polite and respectful.

      I didn't include any deductions or write-offs to further show how the alleged 28% tax rate for a $57k yearly earner was quite off even without them. You putting them in further shows this :-)

      I do see, though, my friend, your tax situation might be more of the exception than the rule :-).

      Yes, I do understand that this does occur, that there are some millionaires that have a lower tax rate than some in the middle class. Personally, I'm a firm believer in flat-rate taxes because since I think any discriminatory system where one person is required to pay a different rate than another is unfair, but, for this debate, I will stick to progressive rate taxes. Back to that... yes, millionaires paying lower rates does occur, but, I think you have read our position on this blog that while it does occur, the fact that many on the left, including the president, sell this as the norm is quite misleading. If we are to live in this progressive tax-rate world that I can't stand :-) than yes, there should be no loop-holes, deductions, etc. I do believe, however, that cap gains should not be taxed at all, and, if they should, it should be even lower than they currently are. This has to do with risk and loss, but that's for another day.

      I'm sure you've seen our other posts on this (these are mainly for others to link to):

      This post shows an IRS data chart that highlights how those in the middle class pay about 5.4% - 12%:

      This post shows how Obama's speech about millionaires paying lower tax rates seems to claim this is normal while the very CRS study he cites shows this is quite statistically rare:

      Thank you again, RKen. I hope all is well and look forward to hearing from you soon.

    2. Thanks, hope you had a good weekend too! And yep, I enjoy the discussions here... very level-headed, mature, respectful and clear. Thanks to you as well for fostering it.

  10. This needs to be updated as a graph for earners in the 50-60k, 60-70k, 70-80k, 80-90k all the way up to 250,00k. The reason is, because middle income is not represented well by one number. Do a graph and show how much a 100,000k individual is paying in tax, we are not wealty -- by any stretch. If I had enough cash on hand to go play in stocks like Buffet, sure I'd pay less tax, but I don't.

  11. In addition add state tax to income tax in your figure -- you might show that indeed the 57k individual pays >= 28%.

    1. Anonymous, thank you for your interest.

      Your first issue is represented here:

      It contains an IRS chart of tax information going up to the "wealthy" taxpayers, though I'm not sure how adding the different income brackets change the argument.

      As far as state income tax - first, state income tax figures are rarely included in this debate. Secondly, if they are, as when I was confronted on Twitter by the claim, "Mitt Romney pays 13.9% while someone making $57k pays 28%" IF calculating state taxes into the figure, you'd have to do that for Mitt Romney, too. So the original argument would also be null. As shown with my income tax information (linked above), I pay around 13.5%, and I'm about as middle class as it gets. Do you realize how much I would have to pay in state taxes to reach 28%? About $7400 more (more than my federal). On top of all that, take into account someone like Mitt would have to pay more in excise taxes (he is wealthier so his homes cost more to heat, he buys pricier goods, etc), but those are left out, too. For simplicity purposes, and since President Obama states when justifying his "Buffett Rule" that "millionaires and billionaires pay lower taxes than the middle class" is only on a federal level, it's wise to look at only a federal situation. If you search for tax articles on this blog, you will find many more analyses on this issue, and how the claim that millionaires and billionaires are paying lower tax rates than the middle class simply isn't true.

      Thank you for writing, and I hope to hear back from you.

    2. Your figures are in error. The taxes for both Clinton and Bush were calculated using the maximum rate for that selected income. For instance the Clinton 1999 tax rate on 30K was 28%, which is what they used to get the 8400 figure. However taxes are not calculated that way. The first 25K of income would have been 2013 tax brackets at the lower 15% bracket first, thus yielding a much lower figure than what you show.I am not arguing that Bush doesn't have lower taxes. He certainly does. Of course he obtained his lower tax brackets by using deficit spending and increasing the national debt. Add back in the interest payments we'll be making and I bet Bush actually cost taxpayers far more than Clinton ever did.

    3. Hello and thank you for your comment. First, let me ask: was this meant for something else?

      You have claimed that my numbers are in error... but what numbers are you referring to? Let me try to respond to each claim:

      "The taxes for both Clinton and Bush were calculated using the maximum rate for that selected income." - What are you referring to? How is this relevant? Additionally, this is incorrect.

      "For instance the Clinton 1999 tax rate on 30K was 28%, which is what they used to get the 8400 figure" - where does this apply in this blog post? If you look at my analysis, I correctly figure out my tax rate using the appropriate brackets. No where in here was a tax rate calculated based on a flat INCOME x RATE calculation.

      "The first 25K of income would have been 2013 tax brackets at the lower 15% bracket first, thus yielding a much lower figure than what you show." - This correct calculation IS shown above. Please read the blog post.

      "I am not arguing that Bush doesn't have lower taxes." - No where in here was a Bush v Clinton argument made. Bush has nothing to do with this. Where is this coming from?

      "Of course he obtained his lower tax brackets by using deficit spending and increasing the national debt." - What does this have to do with anything?

      "Add back in the interest payments we'll be making and I bet Bush actually cost taxpayers far more than Clinton ever did." - You've brought up a massive amount of side issues... and they're totally unrelated. They're also factually incorrect.

      Please help clarify what is going on with this comment. Thank you.

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