Whitehouse Error in Response to Romney’s Tax Rate
by ZetaGecko | Add Your Comments | Politics
After Mitt Romney revealed that he pays about 15% in taxes, White House Press Secretary Jay Carney said:
Everybody who's working hard ought to pay their fair share, and and that includes millionaires who might be paying an effective tax rate of 15% when folks making $50,000 or $75,000 or $100,000 a year are paying much more.
Anybody who's making $50,000 and paying "much more" than 15% needs to switch tax preparers. If they're single, the top portion of the their income may be in the 25% tax bracket, but not all of their income gets taxed at that rate. And their deductions and exemptions are going to reduce their taxable income, reducing the effective rate even further.
Let's run some quick and dirty numbers.
A single person with $50,000 income will start by knocking off about $10,000 with their standard deduction and personal exemption. So they'll have about $40,000 taxable income. The first $8,500 of that will get taxed at 10% ($850). Then next $26,000 will get taxed at 15% ($3,900), and the remaining $5,500 would get taxed at 25% ($1,375). So their total tax would be $6,125, which is 12.25%.
A married couple with two kids with $50,000 income would end up paying only about $3,650, or 7.3%. And in fact, it'd probably be even lower, because they'd get child tax credits and possibly other credits, which may very well reduce their tax to zero.
Even when making $100,000 -- the top number in the White House's comment -- a married couple with two children would probably only pay about 12.25%.
Should millionaires pay more taxes? Some certainly should -- at least those who are paying little or nothing. But the White House's comment was simply incorrect, though I'm sure it was effective at riling up a lot of people who didn't check the numbers and think they're paying a higher tax rate than Romney.