In last week’s issue of The New Yorker, Reuters digital editor Chrystia Freeland has a piece about why millionaires and billionaires have increasingly defected from the president, blaming his rhetoric and hostility as much as his policies. There’s an odd current running through the piece, though, suggesting that America’s 1 percent should be exceedingly grateful to the president for preserving the status quo, because it is so tilted in their direction. At least when it comes to tax policy, this really isn’t true, but no one’s told Freeland. She writes, quoting Republican donor Foster Friess:
“People don’t realize how wealthy people self-tax,” he said. “If you have a certain cause, an art museum or a symphony, and you want to support it, it would be nice if you had the choice.” The middle class anonymously and nervously pays its thirty-five per cent to the I.R.S., while the super-rich pay fourteen per cent, and are then praised for giving five or ten per cent more to pet causes, often with the perk of having their names engraved above the door.
Leaving aside the breathtaking bitterness and partisanship of Freeland’s words, her claims about tax rates paid lack any basis in reality whatsoever. There is almost no “middle class” taxpayer in America who pays 35 percent of his income to the IRS, and not many of the super-rich pay just 14 percent. A 2004 CBO report found that the average federal tax rate for the middle quintile of Americans is 13.8 percent, while the top 1 percent pays 31 percent. The rates these classes pay, that is, are almost the exact opposite of what Freeland suggests.
But let’s give her a little room for rhetorical license — surely there are plenty of middle-class Americans who pay, say, a 35 percent tax rate, and lots of millionaires and billionaires pay a 14 percent rate, right? Well, no, not at all: Yes, when you rank Americans who earn $1 million a year or more by tax rate paid, the average rate in their 25th percentile is 12.6 percent, meaning a bit more than 25 percent of them pay less than a 14 percent federal rate. But almost no one in the middle class pays a 35 percent rate: Even the 90th percentile of those most beholden to the IRS in the $100–200,000-a-year income group (to define “middle class” generously for Ms. Freeland) don’t pay a 35 percent rate; they pay a 24.6 percent rate.
We’re told Newsweek doesn’t employ fact-checkers anymore — but The New Yorker still does, right?
UPDATE: I was looking back at this post for reference and realized that the point here is actually understated: The TPC chart to which I linked above, uploaded by Paul Krugman, looks at just effective income- and payroll-tax rates for all Americans. If you look at effective overall federal tax rates (including share of the corporate tax burden, etc.), Freeland’s description is even further from the truth — the CBO number I cited above is the median effective federal tax rate for the top 1 percent, but the TPC chart I cited from Krugman, which examines what taxpayers in various income tranches pay, finds a much lower rate for the top 1 percent — 23.5 percent from Krugman vs. 31 percent from the CBO. (You can see the TPC’s assessment of the same measure I cited from the CBO here, the numbers are almost the exact same.) Long story short, basically, this means significantly fewer than the 25 percent I guessed at above of the top 1 percent pay Ms. Freeland’s supposedly representative 14 percent rate.