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Romney’s 14.1% Tax Rate is Higher than Most Americans when Comparing Apples to Apples

Posted by FactReal on September 24, 2012

Reporters are comparing Romney’s effective tax rate with Americans’ tax brackets to confuse voters
Effective tax rates and tax brackets are not the same. However, many reporters and political pundits omit this difference to push the false narrative that Romney pays a lower tax rate than the average middle class American taxpayer. They are comparing apples to oranges. USA Today explains:

“[When Romney says he pays 14.1% in taxes, he is] referring to his effective tax rate, not his tax bracket. And by that measure, he’s paying a higher tax rate than the majority of taxpayers…The average effective federal tax rate for American taxpayers is 11%.”

“Effective Tax Rate” does not equal “Tax Brackets”
The effective tax rate is what we actually pay after deductions. They differ from the tax brackets. USA Today‘s article “Tax bracket vs. tax rate: They’re two different things” clarifies the difference:

● Tax bracket:

Ask most Americans how much they pay in taxes, and they’ll probably refer to their tax bracket, a series of rates that ranges from 10% to 35%. […]

Under the United States’ progressive tax system, income is taxed at graduated rates. An individual’s tax bracket, sometimes referred to as the marginal tax rate, refers to the percentage of income that’s taxed at the top tax rate — not the rate for the entire amount.

● Effective tax rate:

The effective tax rate, meanwhile, is the amount a taxpayer pays in taxes as a percentage of total income. The average effective federal tax rate for American taxpayers is 11%, according to an analysis of 2009 IRS data by the Tax Foundation [or here], a non-profit research organization.

[Note: Most of Romney’s income comes from investments which are taxed at lower rates, because they are taxed several times, ie., when he earned those dollars, then when he invested them. We will deal with that later.]

Romney Pays 14.1%; Americans Pay 11% Effective Tax Rate

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