by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Chris Edwards of the Cato Institute offers this preview of his latest piece:
ProPublica is making a splash with articles claiming that rich people pay little tax, based on stolen tax returns for 25 individuals.
I compare ProPublica’s figures to data from the IRS, JCT, CBO, and TPC.
ProPublica’s figures are not representative of top earners generally. Its narrow analysis does not support its broad conclusions.
From the report itself:
Let’s focus on ProPublica’s click??friendly headline: “You May Be Paying a Higher Tax Rate Than a Billionaire.” The article says that a “typical” worker with $45,000 in wages pays a higher federal tax rate that the average of the 25 wealthy people on the stolen tax returns. Including income and payroll taxes, ProPublica says that the typical taxpayer pays 19 percent while the 25 wealthy people pay just 16 percent.
The claim that people in the middle pay a higher tax rate than people at the top is at odds with data from four authoritative sources: the Congressional Budget Office (CBO), the Tax Policy Center (TPC), the Joint Committee on Taxation (JCT), and the Internal Revenue Service (IRS).
The table shows that the ProPublica tax rates are far different than the average effective tax rates for middle and top households published by the CBO, TPC, JCT, and IRS. The rates from these four sources are similar and consistent, while the ProPublica rates are outliers. …
… While ProPublica says that the “typical” taxpayer pays a higher total income and payroll tax rate than the top 25 group, the CBO, TPC, and JCT data show that households in the middle pay tax rates less than half the rates of the top groups.
Looking just at income taxes, ProPublica has a higher rate for their typical taxpayer than the other sources show for the middle groups. ProPublica’s “typical” person is a single worker not receiving child tax credits or earned income tax credits. Also, the person is working and paying payroll taxes, not retired or receiving government benefits.