In Tampa last week to counter the Republican presidential candidates, Democratic National Committee chairwoman and Florida Rep. Debbie Wasserman Schultz instead found herself in a debate with CNN's Wolf Blitzer.
The topic was over federal taxes, who pays and how much.
Here's the relevant part of the exchange:
BLITZER: We don't have to debate the whole issue of taxes and wealthy and all of that. The wealthiest Americans, they pay the most in taxes already — 50 percent of Americans don't even pay any federal income tax, because...
WASSERMAN SCHULTZ: No, that's actually not true, Wolf.
BLITZER: Fifty percent, you don't...
WASSERMAN SCHULTZ: We're at the low — in terms of the wealthiest Americans, we're at the lowest tax rate since the 1950s.
BLITZER: I know, but they pay a huge chunk of the federal income tax, the wealthiest Americans. The top 2 percent or 3 percent pay whatever that number is, 30 or 40 percent.
WASSERMAN SCHULTZ: But they're still at the lowest tax rate since the 1950s.
We checked two parts of the interview — that Wasserman Schultz said Blitzer was wrong to say that "the wealthiest Americans, they pay the most in taxes already — 50 percent of Americans don't even pay any federal income tax," and that the wealthiest Americans have the lowest comparative "tax rate since the 1950s."
• • •
When it comes to the number of people not paying federal income taxes and the share paid by the wealthy, Blitzer is close to right.
The Joint Committee on Taxation, a respected bipartisan committee of Congress found that in 2009, roughly 22 percent of "tax units" ended up paying nothing.
Another 30 percent actually got money back from the government — meaning they made money — through mechanisms such as the Earned Income Tax Credit, a longstanding policy that encourages low-income Americans to work by refunding money through the tax code.
The caveat here is that the statistic is measured in "tax units" — which is people or families who file tax returns. (The calculation will exclude some people, but not, for instance, people who receive unemployment benefits. The Internal Revenue Service considers that taxable income.)
As for what the wealthy pay in taxes, the most recent Congressional Budget Office report shows that just the top 1 percent of households paid nearly 40 percent of income taxes. Meanwhile, their share of total federal tax liabilities was nearly 30 percent.
The 10 percent of households paid 73 percent of all federal income taxes, according to the CBO.
So we rate Wasserman Schultz's statement False.
• • •
Wasserman Schultz's rebuttal that the wealthiest Americans have the lowest comparative "tax rate since the 1950s" was much closer to accurate.
The most basic way to address this question is to use the highest marginal rates for ordinary income — what's commonly called the "top tax bracket." This rate — which today is 35 percent — is applied to any money earned above a certain threshold. For 2011, that level is $379,150 for married couples filing jointly, for individuals and for heads of households, and $189,575 for married couples filing separately.
Between 1960 and the 1980s, when President Ronald Reagan pushed through landmark tax cuts, top tax brackets had much higher rates than those in place today. For instance, the top rate was 91 percent in 1960 and 70 percent on the eve of Reagan's election in 1980.
By 1988, the top federal income tax rate fell to 28 percent, and it stayed there until 1990. It ticked up to 31 percent for 1991 and 1992, before rising to 39.6 percent in 1993.
So from 1988 through 1992, the top tax bracket had a lower rate than today's top bracket. Put another way, out of 52 tax years since 1960, the top tax rate was lower than today's only 10 percent of the time. (Today's top tax bracket has been steady since 2003, so in nine additional tax years, the earlier bracket was tied with today's.)
Because of those caveats, we rate that claim Mostly True.
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