PolitiFact evaluates the truthfulness of an Obama ad
PolitiFact, a Tampa based organization that evaluate the truthfulness of political claims or ads does a very interesting evaluation of an Obama ad about how much Romney pays in taxes. The ad says that Romney ‘s tax rate of 14% is probably less than you pay.
PolitiFact says that if you include payroll taxes then the statement is true but if you only look at income taxes most low income people pay a lower rate.
Note that in the body of their article they estimate that even including payroll taxes Romney’s tax rate would still be 14%.
We should note one obstacle: We don’t know exactly how much Romney paid in payroll taxes. However, based on the amount and types of income listed on his tax return, even a generous estimate wouldn’t budge his overall tax rate much above 14 percent, so we think it’s reasonable to make this kind of calculation.
But their conclusion about the truthfulness of the claim they say that Romney’s tax rate of 14% is based only on income taxes.
There are two main ways to make this calculation, and they lead to opposite conclusions. While we believe that including payroll taxes in the calculation offers a more accurate picture of what the American public pays the IRS, it’s also true that the Obama ad didn’t specify which measurement it was using, and in fact used a figure for Romney — 14 percent — that was based on income taxes alone. On balance, then, we rate the claim Half True.
Apparently, they do not even read their own analysis in reaching their conclusions.
I am baffled. Romney would not pay payroll taxes since all of his money came from investments. He even sneeringly commented (I like the adjective) that he understood unemployment because he too is unemployed.
Just effing kill me.
Let’s assume Romney had the highest possible incidence of FICA. Say if he were self-employed as a 1099 contractor. This would expose him to 12.4% (paying a totally no shit real and not theoretical employer and employee share) of his first $110,900 in covered income. AND NO MORE no matter what the balance between actual covered income, compensation treated as ‘covered interest’, and actual returns on capital in the form of interest, dividends, and realized gains.
NOBODY pays more than around $15k in SS FiCA. Now if Romney managed to reduce his taxable income to a tiny fraction of his increase in cash assets, then $15k in FiCA could on a percentage basis significantly raise his “effective” tax rate. In which case we should call it his “ineffectual” tax rate.
Take Romney’s age vs his working life and compute the average growth in assets over that period. Under what kind of arithmetic would a max tax bill of $15k, which is in fact a worst case scenario for his MOST RECENT YEAR move his combined rate by more than a couple decimal points on the right side?
Plus as Carol Ann points out we don’t know that any part of his income was EVER considered ‘covered income’ for SS purposes in that he famously turned down straight salary in both his Governor and Olympics roles.
The guy is worth $250 million minimum, even if we take the full FICA on every theoretical covered dollar back to his first pay check it COULDN’T be more than a rounding error.
Well, I prefer truth but I am beginning to believe that my preference is quite irrelevant since I probably wouldn’t recognize an absolute truth if it bit me on the finger. Obscuration of information is the norm since the media went from family owned to corporate. So no one is really vetting the vetters. Truth is unrecognizable and may not exist anywhere. And, again, if it did, how would you know?
Did you see on Colbert last night that scientist have proven Stephen’s truthiness?
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Politifact says “We don’t know exactly how much Romney paid in payroll taxes.” Couldn’t they ask a tax expert to figure it out from Romney’s 2010 return? It does include a Schedule SE showing over $29K in self-employment taxes. http://www.washingtonpost.com/wp-srv/politics/documents/romney-2010-tax-return.html
This amount is included in Line 60, which is Romney’s total tax. Politifact used Line 60 in calculating Romney’s tax burden of 13.9%. I don’t know taxes, so please correct me if I’m wrong: does that not mean that Politifact included Romney’s payments to Social Security and Medicare when calculating his tax burden, and therefore must do likewise for everybody else?
Well, gwarsh, Mickey,
it seems to me that “logic” is on rather unstable footing here as elsewhere.
First, do ordinary people pay “15%” FICA, or do they pay, as the law says, about 7 1/2%%, and their boss pays the other 7 1/2%?
I regard it as a sterile question because people argue it both ways depending on what they want to prove.
On the other hand Politifact, no friend of logic or even the real world …. consider their calling “the biggest lie” the Democrats claim that the Republicans would destroy Medicare when, gosh, it says right there in the plan that would leave people without the insurance that Medicare provides that they would continue to call it Medicare…
…were trying to say, in their folksy way, that if you don’t count Social Security, then most folks pay less income tax than even Mitt Romney, who may not pay any, most of the time, and therefore the Obama ad claiming that Mitt pays less (as a percent of income…whisper whisper) is misleading, or only half true.
Which is half true, if you think of it that way.
PJR makes a good point, and one I deliberately suppressed, that is along with the 12.4% of $110k Romney would MAXIMALLY owe under SS FICA, he would be exposed to the full Medicare Tax on ALL “covered income”, which however would not include any gains on capital whether in the form of cash interest/dividends or realized gains. But whether you want to focus on the 12.4% on under cap income or the additional 3% or so on all “covered” income, that $29k is ‘self-employment’ taxes is on the order of one half day of Romney’s taxable earnings. Maybe one part in 750 or so. However you slice it not even a rounding error on his combined effective rate.
This isn’t hard. Romney probably paid a lot more than $29k just in permit fees and sales taxes on his California car elevator.
Right Bruce, the $29K includes the maximum payable to Social Security plus a larger amount paid to Medicare, because the taxable amount was so huge. The $29K is hardly noticeable on the tax return because all the other numbers are so much larger! But that is a terrible excuse for Politifact to fail to notice that the 13.9% calculation includes Romney’s payments to Social Security and Medicare. This is his total tax burden, not his income tax burden.
“Most” people pay more than this and It is a no-brainer that the ad should be rated as TRUE, even using the indirect data that Politifact cites.
Well, at the risk of revealing my secret identity..
THE PAYROLL TAX IS NOT A TAX
It is an insurance premium and forced savings plan that workers will get back when they retire or otherwise need the money.
I dislike Romney as much as anybody, but the payroll tax is still not a tax.
oh, and contrary to Ohlemacher’s AP article, most people get back far more than they pay in.
The “get less than” is a lie they can say with a straight face by crossing their fingers and saying… to themselves… that they mean in “present value” terms. Which means they are saying you will get back from SS less than you would if you gave them the money to invest in their magic bank which always pays an interest rate significantly above inflation, with no risks, and does not provide any of the insurance that SS provides.
And if you are an “average worker” which means… someone who is doing well enough so that they don’t really “need” their SS. That turns out to be less than 50% of workers. Or another way of putting it is that more than 50% of workers would be living in dire poverty when they retire if they did not have Social Security…. even IF there was a real Present Value Magic Bank they could put their money in.
with respect to the Medicare tax not having a cap:
that IS a tax.
All PolitiFact’s analysis belong to us.
Mainstream fact checkers, including PolitiFact, pretty much ignore studies of effective federal tax rates estimating the effects of corporate and excise taxes.
The short story is that it is extraordinarily unlikely that that the average American’s effective tax rate is less than Romney’s. For the longer story, go here:
Well Bryan those folks at that website also failed to understand what income, and taxes, are reported on Romney’s IRS return that led everybody in the world to cite the 13.9 percent tax burden figure. Then they compound this error by suggesting that Romney pays loads of (amount unspecified) corporate income taxes because, well, rich folks like Romney do that. Actually, some do, some don’t, and if you include corporate income taxes in the numerator you need to include corporate income in the denominator when computing the tax burden. I have no problem pointing to Politifact failings (see above comments–and it’s not the first time I’ve found them making mistakes) but that website appears to offer far sloppier analysis in support of a one-sided political agenda.
PJR, you fail to understand that I do not fail to understand either of the things you suggest “those folks” do not understand (it’s my post).
People deriving most of their income from capital gains have that income taxed twice. You never see the first bit of taxation on a personal income tax form like Romney’s. That’s why researchers like the CBO have to make a special effort to estimate those types of tax effects (same for federal excise taxes, which disproportionately affect the lower quintiles–you won’t see it on the tax from from a McDonald’s shift worker). The “one-sided political agenda” is flatly supported by the CBO’s findings. Ignoring that makes you look like you’re squinting at reality to preserve your own political agenda.
that capital gains “taxed twice” meme depends on the fantasy that people who own stocks “own” the corporation. that’s ludicrous. it’s like saying my stack of blue chips are an ownership share in the casino.
i don’t really understand your point above, but it does illustrate that “oo pays taxes…” is at best somewhat of an intellectual “construct.” unless of course one is willing to settle for the legal definitions and what shows up on the tax bill.
which, oddly, i am willing to do. but only because it helps keep the “thinking” within some predictable bounds.
maybe a slight clarification
by the “analysis” of Bryan, as i understand it, I am paying the corporate income tax every time I buy a product from them, in which their taxes are embedded in the price i pay.
sure, it’s true. but it also leads to insanity to think that way. look at what it’s done to the Republicans.
The analysis was done by the Congressional Budget Office–repeatedly. CBO reports are normally gold to a fact checker. You need to wonder why PolitiFact and others mostly ignore this set of reports while eagerly seeking out CBO data at other times. And maybe figure out why you’re shooting the messenger. 🙂
Yes, you pay a share of corporate income taxes. I’ve got the report linked through the article, so you can look up the estimate of your share. Guess what? It’s not insane. It’s basic economics.
on the other hand “basic economics” is insane.
I wasn’t arguing about the truth of what you were saying. I said i didn’t really understand it, but it looked to me like you were wandering down that path of “oo really pays” taxes. The treacherous thing about that path is you can argue it up down and sideways, and it doesn’t mean anything in the end. I prefer to go by what the law says. Not that I like the law, but at least we can all more or less agree about what it says.
And no, I don’t take CBO much more seriously than I take PolitiFact. Politifact has shown me they don’t understand what they are talking about and can’t evaluate the difference between “important lie that might be technically “true” but ignores other facts to your peril” and “trivial lie that is hardly more than a “misspoke” or “fun exaggeration.”
while CBO is a little better on actual facts, they don’t go to any great pains to make their conclusions clear, or demonstrate the consequences. maybe the opposite of “dishonest”: politically cautious to the point of negligence.
Bryan I understand the argument about corporate taxes, my point is that we don’t know what corporate taxes if any should be attributed to Romney–the individual, not his income group. How much was passed through without taxation, and in what years? We have no numbers to use for Romney, and they may be shockingly low or non-existent depending on how he/Bain avoided corporate taxes. Last, I’ll maintain that adding corporate taxes to the numerator (if they are known for a person) without considering the denominator is inappropriate when calculating a tax burden.
A letter to politifact
In plain words your article on the 14% that Romney paid on his 2010 taxes is innumerate bullshit
First of all he would not pay any Social Security or Medicare taxes on non-wage earnings and that is the vast bulk of his declared income.
Second, we KNOW how much he paid in Social Security and Medicare Taxes, it is right there on his return in line 27 where he lists half the Social Security and Medicare Taxes from Schedule C Self Employment 2 x $14,576 or 29,152
Third we KNOW what his income was, 21,661,344.
Fourth, we KNOW how much he paid in taxes 3,009,766
You can find all of these numbers at
So now you pick up your cell phone and do some long division.
The Social Security and Medicare Taxes as a percentage of his income is 29,152/21,666,344x 100% = 0.134%, or a bit more than an additional tenth of a percent
The Income Tax he paid was 3,009,766/21,661,344 x 100% = 13.89% of his income
Then add it up and you find the percentage of the Federal Income Tax and Social Security and Medicare Tax he paid = 14.02%
So you are moaning about .02%?
You owe the Obama campaign a grovelling apology.
EliRabett you double-count the self-employment tax to get to get above 13.9 percent. See lines 55-60 of Romney’s 1040.
Turns out the fact checkers at “Just Facts” did the numbers, and they turned out as I expected:
“Using CBO’s new estimate for allocating the burden of corporate income taxes, Just Facts and Ceterus calculate that Romney’s federal tax rate was 23.3% in 2010, which is twice the middle-income tax rate in 2009.”