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Can't Catch a Break: Washington Post Takes Team Obama to Task for False Claims -- Again!

Can't Catch a Break: Washington Post Takes Team Obama to Task for False Claims -- Again!

We're starting to think Team Obama enjoys the abuse.

The Obama campaign has made yet another false claim about former Massachusetts Gov. Mitt Romney and the Washington Post’s (WaPo) Fact Checker has issued yet another refutation.

We're starting to think Team Obama enjoys the abuse.

“FACT: In 2010 and 2011, Romney paid less than 15% in taxes on $42.5 million in income—much less than what many middle-class families pay,” Team Obama tweeted.

Okay, for starters, Romney's tax rate is at that level for two reasons: much of his income is capital gains and dividends (which are taxed at a rate as low as 15 percent) and he donates about 14 percent of his income to charity (hello, hefty tax deduction).

In fact, as the WaPos’ Glenn Kessler notes, the former Massachusetts governor gives as much to charity ($3 million) as he pays in taxes.

“Those itemized deductions are counted against income that would ordinarily be taxed at a 35-percent rate,” Kessler writes. “We figure that without those donations to charity, his effective tax rate would be at least 19 percent.”

So, while the Obama campaign is not wrong when it says Romney paid around 15 percent of his gross adjusted income in taxes, Kessler believes the “much less than what many middle-class families” bit needs to go.

“First of all, most of Romney’s taxes are federal income taxes. He pays relatively little in payroll taxes because the 6.2 percent Social Security tax maxes out once you earn a certain amount -- $110,100 in 2012. Romney in effect earns that much by Jan. 3,” Kessler writes.

“But for most Americans, payroll taxes are the biggest tax item,” he adds.

The Fact Checker evaluation continues:

People often confuse marginal tax rates with effective tax rates. Marginal rates are what you pay on each additional dollar of income, so that can be as high as 35 percent. The effective tax rate is the percentage of taxes you pay after deductions, adjustments and the like.

Kessler then directs our attention to a Tax Policy Center chart of effective federal tax rates.

“The chart shows the effective tax rate as a percentage of AGI [Adjusted Gross Income] …with the values based on a concept known as cash income,” he writes.

“Cash income is not quite the same as adjusted gross income, but … the AGI numbers in the charts [should] provide the closest apples-to-apples comparison to Romney’s tax return,” he adds.

Effective Tax Rates (taxes paid on tax return/closest equivalent of Romney's tax return):

Bottom 20 percent (0-$17,000): -5.8 percent

Second 20 Percent ($17,000-$33,500):  1.3 percent

Middle 20 percent ($33,500-59,500):  9.2 percent

Fourth 20 Percent ($59,000-$103,500): 12.9 percent

Top 20 Percent ($103,500+):  20.6 percent

Effective Tax Rates (also including payroll tax paid by employer):

Bottom 20 percent (0-$17,000): 1 percent

Second 20 Percent ($17,000-$33,500): 7.8 percent

Middle 20 percent ($33,500-59,500): 15.5 percent

Fourth 20 Percent ($59,000-$103,500): 18.7 percent

Top 20 Percent ($103,500+):  24.3 percent

So how do we make sense of this?

“Romney had an effective rate of 13.9 percent in 2010 and 15.4 percent in 2011, which gives him a higher rate than 80 percent of taxpayers in the first method and puts him just about in the middle of all taxpayers in the second method,” the Fact Checker writes.

So, with that in mind and after looking at the chart, it's clear that Romney’s tax rate is not “significantly lower” than the rate paid by a majority of middle-class Americans.

How did the Obama campaign respond to Kessler’s criticism?

They countered by arguing that they Tweeted “many” and not “most” (duh, there’s a difference) and they actually provided the Fact Checker with a dictionary definition of the word (which is funny because we thought dictionary definitions were for desperate people).

So what’s the bottom line?

“The Obama campaign’s tweet relies on a very slippery 'fact,'" Kessler writes.

“Romney, by receiving much of his income in capital gains and dividends and giving millions of dollars to charity, is certainly able to keep his effective tax rate relatively low, especially compared to a wealthy person who earns much of his or her income in salary,” he adds.

“But, even so, Romney still pays an effective tax rate that is higher than the tax rate paid by most Americans."

Final verdict: Three Pinocchios.

Read the full report.

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