Image: Barack Obama
Evan Vucci  /  AP
President Barack Obama gestures while speaking in the Rose Garden of the White House in Washington, Monday, Sept. 19, 2011.
updated 9/20/2011 4:34:47 PM ET 2011-09-20T20:34:47

President Barack Obama says he wants to make sure millionaires are taxed at higher rates than their secretaries. The data say they already are.

"Warren Buffett's secretary shouldn't pay a higher tax rate than Warren Buffett. There is no justification for it," Obama said as he announced his deficit-reduction plan this week. "It is wrong that in the United States of America, a teacher or a nurse or a construction worker who earns $50,000 should pay higher tax rates than somebody pulling in $50 million."

Story: Obama announces debt plan built on taxes on rich

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.

The 10 percent of households with the highest incomes pay more than half of all federal taxes. They pay more than 70 percent of federal income taxes, according to the Congressional Budget Office.

Story: Tax timeline will drive Obama and Congress

In his White House address on Monday, Obama called on Congress to increase taxes by $1.5 trillion as part of a 10-year deficit reduction package totaling more than $3 trillion. He proposed that Congress overhaul the tax code and impose what he called the "Buffett rule," named for the billionaire investor.

The rule says, "People making more than $1 million a year should not pay a smaller share of their income in taxes than middle-class families pay." Buffett wrote in a recent piece for The New York Times that the tax rate he paid last year was lower than that paid by any of the other 20 people in his office.

"Middle-class families shouldn't pay higher taxes than millionaires and billionaires," Obama said. "That's pretty straightforward. It's hard to argue against that."

There may be individual millionaires who pay taxes at rates lower than middle-income workers. In 2009, 1,470 households filed tax returns with incomes above $1 million yet paid no federal income tax, according to the Internal Revenue Service. But that's less than 1 percent of the nearly 237,000 returns with incomes above $1 million.

This year, households making more than $1 million will pay an average of 29.1 percent of their income in federal taxes, including income taxes, payroll taxes and other taxes, according to the Tax Policy Center, a Washington think tank.

Households making between $50,000 and $75,000 will pay an average of 15 percent of their income in federal taxes.

Lower-income households will pay less. For example, households making between $40,000 and $50,000 will pay an average of 12.5 percent of their income in federal taxes. Households making between $20,000 and $30,000 will pay 5.7 percent.

The latest IRS figures are a few years older — and limited to federal income taxes — but show much the same thing. In 2009, taxpayers who made $1 million or more paid on average 24.4 percent of their income in federal income taxes, according to the IRS.

Those making $100,000 to $125,000 paid on average 9.9 percent in federal income taxes. Those making $50,000 to $60,000 paid an average of 6.3 percent.

Obama's claim hinges on the fact that, for high-income families and individuals, investment income is often taxed at a lower rate than wages. The top tax rate for dividends and capital gains is 15 percent. The top marginal tax rate for wages is 35 percent, though that is reserved for taxable income above $379,150.

With tax rates that high, why do so many people pay at lower rates? Because the tax code is riddled with more than $1 trillion in deductions, exemptions and credits, and they benefit people at every income level, according to data from the nonpartisan Joint Committee on Taxation, Congress' official scorekeeper on revenue issues.

The Tax Policy Center estimates that 46 percent of households, mostly low- and medium-income households, will pay no federal income taxes this year. Most, however, will pay other taxes, including Social Security payroll taxes.

Video: Obama’s plan built on taxes on the rich (on this page)

"People who are doing quite well and worry about low-income people not paying any taxes bemoan the fact that they get so many tax breaks that they are zeroed out," said Roberton Williams, a senior fellow at the Tax Policy Center. "People at the bottom of the distribution say, 'But all of those rich guys are getting bigger tax breaks than we're getting,' which is also the case."

Treasury Secretary Timothy Geithner was pressed at a White House briefing on the number of millionaires who pay taxes at a lower rate than middle-income families. He demurred, saying that people who make most of their money in wages pay taxes at a higher rate, while those who get most of their income from investments pay at lower rates.

"So it really depends on what is your profession, where's the source of your income, what's the specific circumstances you face, and the averages won't really capture that," Geithner said.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Video: Chuck’s First Read: Republican Punches

  1. Closed captioning of: Chuck’s First Read: Republican Punches

    >>> get to my first reads. in case you had any doubt that the president's speech marked the end of the governing season, white house communication director dan fire confirms it, we were in a position of legislative compromise by necessity. that phase is behind us. the president released his deficit plan and it was greeted with a thud by republicans. middle east peace may look more attainable to the president than selling republicans on his plans for the economy.

    >>> the president laid out a $3.2 trillion deficit reduction package which includes $1.5 trillion in new tax hikes on wealthier americans.

    >> i will not support any plan that puts all the burden for closing our deficit on ordinary americans. this is not class warfare . it's math.

    >> while congressional republicans gave an air of let's wait and see on the president's jobs bill, yesterday they did no such thing. they pounced. speaker boehner made it clear he wasn't sold.

    >> i don't believe that class warfare is leadership. you know, we can get into this tax the rich, tax the rich, but that is not the basis for america. it's not going to get our economy going again.

    >> at ea time when it's spending out of control, giving the federal government more money would be like giving a cocaine addict more cocaine.

    >> mitch mcconnell was equally blunt. he issued a terse two sentence statement saying the president's plan is not a recipe for economic or job growth . the good news is that the joint committee is taking this issue far more seriously than the white house . everybody can start pointing fingers as who started the campaign first, but the bottom line is this, we are in campaign mode. we are no longer in governing mode. the white house made that clear. mitch mcconnell made that clear with his statement. this is all about defining the battle lines. joining the campaign which is going to be about who's responsible for this gridlock in washington. republicans are hoping the public blames the president and the white house believes they can run against a do nothing congress, but the bottom line is with 14 months to go, as dan fire said it, the phase that we saw in the summer is over. the campaign is on.

    >>> for the second time in as many months, rick perry is planting himself within a five mile radius of the president. he will criticize the president's israeli policy at a 10:00 press conference. then he holds a noon lunch fundraiser at the harvard club. yesterday what was supposed to be a quiet fundraiser in washington heights turned into a political circus, complete with gate crashing by charlie rangel . we'll have more on that later. in a new gallup poll , perry leads 31 to 24% over romney. when asked their preference as the field narrows to two front runners , republicans pick rick perry over romney by 10 points, 49-39. that is a fairly close margin there when you look at it. when we've seen these quote, two way races in previous years. perry is the favorite, but he is a front runner that can get caught. it will be interesting to see how this plays out. you're seeing that bachmann has faded. ron paul will certainly be a factor here. if you're mitt romney you want ron paul and michele bachmann to stick around as long as possible. when they get out, you see how close perry gets to 50.

    >>> the journalist ron suskind is responding to criticism of his book "confidence men." it uses a lot of quotes from his former team of economic advisers. he quotes peter orszac. he quotes another former obama adviser, christina romer who had her issues with larry summers and says summers was deliberately blocking her from meetings with the president at the time roamer told suskind , i felt like a piece of meat. there was the allegation that anita dunn is quoted as saying this place would be in court for a hostile workplace because it actually fit all the classic legal requirements for a genuinely hostile workplace for the president. there's an important clause missing, if it wasn't for the president. they're saying their words were taken out of context. treasury secretary tim geithner it to play defense because he wasn't painted positively in the book. here's what he said.

    >> the reports i've read about this book bear no resemblance to the reality we lived together. no resemblance.

    >> the white house has been pushing back hard. they even suggested yesterday that suskind simply borrowed from the internet for portions of his book. here's what jay carney said.

    >> one passage seems to be lifted almost entirely from wikipedia in the book. i think based on that, i would caution anyone to assume that if you can't get those things right that you suddenly get the broader analysis right. that analysis is wrong.

    >> now, the wikipedia charge comes from a description of fannie mae , not in flowery language and suskind was asked to respond to those charges this morning on the "today" show.

    >> you've got to use a combination of a certain number of words. they're not the same in the two sentences. the white house should be doing something better on wicky searches on a 500 page book. the white house should respond to whether the president is getting gamed by his advisers or not.

    >> ann curry asked him to defend his quote from anita dunn which he says was taken out of context. here's what he said.

    >> i let "the washington post " listen to the tape. there it is clear as a bell.

    >> let me get to that what's on tape. i understand what's on tape is the fact that she said "if it weren't for the president, this place would be in court for a hostile workplace." that's not the same as saying it's a hostile work environment . did you take liberties with that quote?

    >> absolutely not.

    >> let's get to the bigger issue here, why is the white house pushing back? one big reason is because the criticisms expressed in this book get at the heart of the president's political problem right now, that is the leadership deficit that is showing up in polls, where even his -- some of his supporters, people who like him feel as if he's not showing enough leadership. you talk to supporters and campaign strategists for the president and they will tell you this is the biggest issue he has to overcome, this perception that he's not a strong leader, and so when you look at the book through that prism, you see why the white house is working so hard


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