There aren’t many things the Left likes more than hammering ordinary American workers with tax increases to pay for more government entitlements. Look at any left-wing idea and you can bet they plan to finance it by taking money from the pockets of the people who actually earned it. Then they blame conservatives for the high tax bills, claiming that the middle class is paying so much because of special tax breaks for the ultra-wealthy.
Joe Biden has been trying it again this month on the campaign trail, telling crowds that “We’re in a situation where you have the top 1%, in fact . . . paying a lower tax rate than you do.” Is this true? Are America’s billionaires really handing over a smaller share of their earnings? Or is Sleepy Joe just making stuff up again?
- According to Joe Biden, the top 1% of taxpayers are paying a lower rate of tax than the average American with a middle-income job — he specifically named teachers, firefighters and cops as examples of the people he says are being treated unfairly.
- Biden says the rich pay “mostly capital gains (tax).” It’s true this is a lower rate than income tax — but his selective figures don’t tell the whole story. Or anything close to it, really.
- The top rate of tax on capital gains — the tax you pay when you sell an investment — is 20%. The Net Investment Income Tax (NIIT) bumps that up to 23.8%. Most capital gains tax is paid by the top 1% of taxpayers.
- The top rate of federal income tax is much higher, at 37%, and almost everyone pays federal income tax — so most of them are middle to low earners. That seems to be what Biden is basing his claims on.
- However, most people aren’t paying federal income tax at the top rate. To pay 37% you need to have an income of more than half a million dollars a year; if you earn less than $82,500 — which most working Americans do — the highest rate you’ll pay is 22%. That’s lower than capital gains with the NIIT added.
- If you actually add up the total tax paid by the top 1% and compare it with what middle earners of between $50,001 and $87,300 pay, what you find is that tax rates don’t work the way Biden says they do.
- In fact, middle earners pay an average federal tax rate of 12.4%. The top 1% pay 30.2% — the highest federal tax rate of any income group in the US.
- The Tax Policy Center, which tracks how much of our money the government is taking, said “the federal tax system is very progressive. The more you make, the more you pay.”
- Biden’s campaign was contacted for details of his claim and gave Factcheck.org a fact sheet they said backed up their candidate. According to the sheet, an American making $75,000 a year is paying a total tax rate of 19.7% — and the top 1% are paying 24.7%. Even Biden’s own sources don’t back up his claim. He’s just wrong.
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