Obama Ad: Simply False

An Obama ad running now belies logic…

“But chances are you pay a higher tax rate than him.”
“Mitt Romney made twenty million dollars in two thousand ten but paid only fourteen percent in taxes…probably less than you.”

The implication here is that the viewer of this commercial is *likely* to pay more than 14% in federal income taxes. On some forums, I'd have to explain the difference between "chances are" vs "there's a chance" as well as "probably" vs "perhaps" (not to mention the difference between "imply" vs "infer"), but I think most people understand the distinctions.

Knowing something about the distribution of taxes, I was incredulous. So I hopped onto the IRS website to check the most recent data (2009). According to the IRS, the average effective tax rate paid by the lower 99% of the nearly 140 million tax returns was only 8.43%.

But funny things happen to number when you average in cumulative blocks like that. For example, if there are ten people in a room, where nine have $1 in their pocket and one has $100, it is accurate but uninformative to say that the average is $10.90. So I checked the CBO site too.

The CBO reports the data differently than the IRS, breaking down tax returns by income quintiles (and a few sub groups). According to the CBO, the lower four quintiles have effective income tax rates of -6.6%, -0.8%, 3.0% and 6.0%, respectively. That is, 80% of all tax returns have effective tax rates below 6%. According to the CBO data, you'd need to be in the top 10% by income before your effective tax rate hits 15%.

It seems to me that the odds of a viewer of that ad paying more than Romney's 14% is about 1 in 10 or thereabouts--hardly rising to the level of "chances are" or “probably” when comparing Romney’s 14% effective rate to the effective rates of the a random person watching the ad.

If you think what Romney paid was too little, argue that point. But stop making false statements.

My family's effective income tax rate last year was 21.36%. That's about 5% higher than the Obama's tax rate, and we made less than half of what the Obama's reported. It would be wrong for me to put out an ad saying "Chances are you paid a higher rate than Pres. Obama." even if it happened to be true for me.