President Obama has determined that his path to retaining power amid dismal economic news is to portray himself as being in the trenches with the middle class while Mitt Romney leads the charge on behalf of the rich.
With 12.7 million Americans unemployed and 8.2 million employed only part-time because they cannot find full-time work, Obama can't make a credible case that Americans with lower incomes have prospered during his presidency. So he's settled on the argument that if he's re-elected, he'll make the rich pay higher taxes to reduce deficits, prevent cuts to Medicare and finance more economic stimulus.
Put aside the fact that Obama's proposed tax hike on the top 2 percent of American earners wouldn't raise nearly enough to make a dent in the deficit or meaningfully delay the day of reckoning on Medicare. Ignore also that his previous $831 billion economic stimulus package didn't live up to his promises. The real problem is that Obama is basing his election-year argument on the premise that for decades, the wealthy have not paid their fair share of taxes, while lower-income taxpayers have been taking on an increasing burden. A new report by the Congressional Budget Office blows a hole in that argument.
Between 1979 and 2009, a period which includes both the Reagan and Bush eras, the notorious top 1 percent of income earners did see their average tax rates fall, according to the CBO, from 35.1 percent to 28.9 percent. But the bottom 20 percent of income earners saw an even steeper decline in their average tax rates -- from 7.5 percent in 1979 to just 1 percent in 2009.
The disproportionate amount of taxes paid by those with higher incomes becomes more apparent when looking at their share of the nation's federal tax liability. The top 1 percent paid 38.7 percent of income taxes in 2009, and the top 20 percent paid 94.1 percent of income taxes.
Many Americans with lower incomes do pay various excise taxes, as well as payroll taxes toward Social Security and Medicare. But that fact doesn't change the overall pattern. When all federal taxes are included, the top 1 percent paid 22.3 percent of taxes in 2009, compared to the bottom 20 percent, who paid only 0.3 percent of the taxes. That means that the proportion of taxes paid by the top 1 percent is 74 times the amount paid by bottom 20 percent. In 1979, the top 1 percent was only paying seven times as much in taxes as a share of all taxes collected.
Some may counter that the rich pay a lot more because they earn a lot more. But even factoring in income inequality, wealthier Americans still pay a disproportionate amount in taxes. The top 1 percent, who as we see above paid 22.3 percent of all federal taxes in 2009, earned only 13.4 percent of income in the U.S. that year. The top 20 percent, who earned 50.8 percent of income, paid 67.9 percent of taxes. In contrast, every other income group paid a lower share of taxes than they earned in income.
We'll have to wait until November to see if Obama's class warfare campaign proves a successful political strategy. But we already have the facts. The idea that the rich don't pay their fair share in taxes is a myth.
Philip Klein (email@example.com) is a senior editorial writer for The Washington Examiner. Follow him on Twitter at @philipaklein.