Close-up: Despite "tea party" tempest, taxes down, dropping
As thousands of anti-tax protesters rallied across the nation Wednesday and the president promised tax cuts for most, new data showed that the federal income-tax burden is hovering near its lowest level in three decades for all but the wealthiest Americans.
The Washington Post
WASHINGTON — As thousands of anti-tax protesters rallied across the nation Wednesday and the president promised tax cuts for most, new data showed that the federal income-tax burden is hovering near its lowest level in three decades for all but the wealthiest Americans.
The nonpartisan Congressional Budget Office (CBO) estimates the average family forked over barely 9 percent of its earnings to the Internal Revenue Service (IRS) in 2006, the most recent year for which information is available. The effective tax rate hit its all-time low in 2003 and has crept up only slightly since.
Middle-class families — to whom President Obama has delivered even more tax relief since he took office in January — have fared especially well, according to the CBO. The middle fifth of taxpayers, who earned an average of $60,700 per household in 2006, paid 3 percent in federal income tax that year, down from a high of 8.3 percent in 1981.
A majority of those surveyed by Gallup last week said the amount of federal income taxes they pay is either "too low" or "about right," compared with 46 percent who said their tax bills are "too high," one of the most positive assessments of the federal tax burden since Gallup began asking the question in 1956.
Gallup analysts said the poll results also may reflect confidence in Obama's pledge not to raise taxes on families making less than $250,000 a year, a vow he repeated Wednesday in a tax-day speech. He presented nine taxpayers he said were better off because of tax breaks enacted in the economic-stimulus package, including a tax credit for working families worth up to $800 this year.
"We start from the simple premise that we should reduce the tax burden on working people, while helping Americans go to college, own a home, raise a family, start a business and save for retirement," Obama said. "Those goals are the foundation of the American dream, and they are the focus of my tax policy."
Still, thousands of protesters marked the day by attending more than 750 "tea parties" from Florida to Hawaii, organizers said. The rallies were promoted by FreedomWorks, a conservative nonprofit group led by Dick Armey, a lobbyist and Texas Republican who once served as House majority leader.
In a pre-rally telephone interview from Atlanta, Armey conceded that "the federal tax rate right now is at a good level." But, he said, "there are very few people who believe Obama will be content to leave it at that."
Anticipating higher rates
Armey said the real target of the protesters' ire is not the current tax rate but the much higher one that will be needed to pay for trillions of dollars in financial-sector bailouts; the stimulus package, which is projected to add nearly $800 billion to the federal debt over the next 10 years; and Obama's health-care and education initiatives, which are projected to raise the debt by trillions of dollars more.
Although tea-party organizers insisted they had created a nonpartisan grass-roots movement, others said the parties were largely created by the clamor of cable news and fueled by financial and political support of current and former Republican leaders.
Fox News covered the events all day. Neil Cavuto, a Fox host, and Michelle Malkin, a conservative contributor, headlined the protests in Sacramento, Calif., while Sean Hannity broadcast his show from the protests in Atlanta.
It was hard to determine from the moderate turnout how effective the parties would be. In Philadelphia, a rally drew about 200 rain-soaked participants.
Several hundred people showed up in Lafayette Park opposite the White House, until the park and parts of Pennsylvania Avenue were cleared while a robot retrieved what the Secret Service confirmed was a box of tea bags.
Lone Star on its own?
In Austin, Texas, Gov. Rick Perry energized a crowd of about 1,000 by accusing the Obama administration of restricting states' rights and vaguely suggesting Texas might want to secede.
In Boston, home of the original tea party, the protest was on Boston Common, near the State House. The crowd, initially about 500, grew throughout the day.
Overlooked Wednesday was one big drawback for the nation's finances: More people are likely to pay no income taxes.
According to the most recent IRS statistics, about 45 million households — one-third of all filers — owed no federal income tax after taking their credits and deductions in 2006. This year, with the profusion of new credits in the stimulus package, about 65 million households — or 43 percent of all filers — are likely to owe no income taxes, according to a new analysis by the Tax Policy Center.
Even filers who have no income-tax liability still pay federal taxes, due in large part to the payroll tax, which pays for federal insurance programs such as Social Security. According to the CBO, taxpayers shelled out an average of 7.5 percent of their earnings in payroll taxes in 2006.
Information from The New York Times is included in this report.
Copyright © 2009 The Seattle Times Company
NEW - 07:13 AM
South Carolina Gov. Nikki Haley is writing memoir
Seattle Times transportation reporter Mike Lindblom describes some of the factors that may have led to the collapse of the I-5 bridge over the Skagit River in Mount Vernon on Thursday, May 23.