Friday, August 10, 2012

PolitiFlub: PolitiFact again ignores data on effective federal tax rates

 Crossposted from Sublime Bloviations

PolitiFact's latest fact check involving federal taxation sticks with its persistent pattern of ignoring and/or minimizing data on effective federal tax rates, including a study by the otherwise esteemed Congressional Budget Office.
A new ad from President Barack Obama’s campaign continues the drumbeat that Mitt Romney is a privileged rich guy who isn't paying his fair share of taxes.

"You work hard, stretch every penny," a narrator says. "But chances are, you pay a higher tax rate than him: Mitt Romney made $20 million in 2010, but paid only 14 percent in taxes — probably less than you."
Huh.  The Obama campaign didn't specify federal income taxes.  No worries.  Obama isn't Michele Bachmann, so PolitiFact can overlook the campaign's oversight.

PolitiFact then:
Bachmann would have been right if she’d said, "the top 1 percent of income earners pay about 40 percent of all income taxes into the federal government." But she didn’t say that -- and even if she had, her decision to focus on income taxes, rather than looking at the whole federal tax picture, would have presented the numbers in such a way that wealthier Americans would look more heavily taxed than they are.
So we want "the whole federal tax picture"?  Not so.  PolitiFact wants the tax picture minus the effects of corporate and excise taxes.  The thread is consistent and continues through today.

If you just look at income taxes, Obama is incorrect.
Bummer.  But since Obama didn't specify "(federal) income taxes" PolitiFact can consider payroll taxes while continuing to ignore corporate and excise taxes.  Or something like that.

So what happens when you add payroll taxes to income taxes? Obama's ad is accurate. Here's the breakdown when you include income taxes and both sides of the payroll tax (the parts paid for by employee and employer):

Bottom fifth of earners: 1 percent
Second-to-bottom fifth:  7.8 percent
Middle fifth: 15.5 percent
Second-highest fifth: 18.7 percent
Highest fifth: 24.3 percent

Once again, we can’t know exactly what percentage of Americans paid a higher effective tax rate than Romney's 14 percent, but the top two ranges, plus a significant share of the middle group, most likely did. So probably more than half exceeded Romney’s rate, making the Obama ad accurate.

Yippee!  Obama's ad is accurate!  Average out the true and the false, give the president a "Half True" and nobody really needs to know about that messy corporate and excise tax stuff.

Speaking of that messy corporate and excise tax stuff:

(click image for enlarged view)

The chart comes directly from the CBO report mentioned up above.  There are two important things to note.  First, excise taxes fall more heavily on those in the lower income quintiles.  That's a minor point.  Second, the burden of corporate taxes falls heavily on those with higher incomes.  And the higher you go with income, the higher the corporate tax burden.  That likely means that persons like Romney pay higher portions of the corporate tax burden as a percentage of their federal taxes.

Using "the whole federal tax picture" that PolitiFact once cited as its ideal standard, the middle quintile pays less than half the average federal tax burden of a person in the top 1 percent in 2006 (14.2 percent compared to 31.2 percent).  That means that it is very probably false that most people pay less more in federal taxes than Romney.

Luckily for the president, PolitiFact can make it look otherwise by cherry picking.

That's PolitiFact for you.


See also the review of a similar story from Annenberg Fact Check.

After Afters:

Just a little review of what PolitiFact wrote while rating Bachmann "False":
[Bachmann's] decision to focus on income taxes, rather than looking at the whole federal tax picture, would have presented the numbers in such a way that wealthier Americans would look more heavily taxed than they are.
PolitiFact's hypocrisy is pretty overwhelming, isn't it?

Correction Aug. 13 2012:
Less is more, after the correction.


  1. You might think that those who frequently accuse others of cherry picking or comparing apples and oranges would avoid doing the same themselves. Apparently not. It's not clear this is intentional, though.

    There doesn't seem to be a good grasp of tax issues at PolitiFact. Their articles on the subject often display a lack of understanding of the issues. When mistakes are pointed out (e.g. the tax for gold medal winners), they don't even comprehend that mistakes were made.

    PolitiFact's errs so often on this subject that it's difficult see any purposefulness in it. More likely, it's just the result of the Dunning-Kruger effect.

  2. Speaking for myself, I work at granting PolitiFact the benefit of the doubt as to intentionally distorting its fact checks.

    That said, the role of corporate taxation in the federal tax picture is pretty obvious. And the information is dead easy to find. Researchers are likely to trip over it. PolitiFact staffers have established a pattern of ignoring correction when they are unambiguously wrong.

    Even so, it would be incredible if PolitiFact deliberately and systematically skewed its assessments. Toss in some motivated reasoning with the Dunning-Kruger effect and you're probably right, in my view.