Last month, we reported on a high-profile fact-checking dispute between New York Times columnist Paul Krugman and the Associated Press over how many millionaires are actually taxed less than middle-income tax payers. But a new report by the Congressional Research Service shows that about 25 percent of millionaires pay federal taxes at a lower rate than some middle-income taxpayers, bolstering the point made by Krugman and Omaha billionaire Warren Buffett.
Bloomberg highlights the report's findings on millionaire tax rates:
Preferential treatment of investment income and the reduced impact of payroll taxes on high earners lets about 94,500 millionaires pay taxes at a lower rate than 10.4 million “moderate-income taxpayers.”
The dispute began with a column Buffett wrote in The New York Times in August. The following month, while pushing for his deficit plan that would raise taxes on millionaires, President Obama repeated Buffet's argument that millionaires should never be taxed less than their secretaries. The AP subsequently ran a fact-checking story saying the president was over-stating his case.
President Barack Obama says he wants to make sure millionaires are taxed at higher rates than their secretaries. The data say they already are...
On average, the wealthiest people in America pay a lot more taxes than the middle class or the poor, according to private and government data. They pay at a higher rate, and as a group, they contribute a much larger share of the overall taxes collected by the federal government.
To Krugman, the AP's analysis was "stupid" and misleading. "The media have decided that Obama was fibbing when he said that some millionaires pay lower tax rates than their secretaries," wrote Krugman. "This is, of course, stupid: the operative word is SOME." In response, the AP responded with this statement to The Atlantic Wire: "The story takes pains to say that there *are* some instances of the wealthy paying no taxes, or relatively low taxes. But those were the exception, less than 1 percent of returns filed by millionaires."
Now it's worth pointing out that the AP and the CRS were not looking at the same data. The AP looked at tax code from 2009, while the CRS looked at IRS data from 2006. And while the AP's 1 percent is the number of taxpayers who make more than a million dollars but pay absolutely no taxes, Buffett, Obama and Krugman are talking about millionaires who pay at a lower tax rate than middle-income taxpayers. Still, the CRS numbers bolster the point that the President, billionaire and columnist have been making.