Tags: reid | wealthy | tax | breaks

Reid Exaggerated Tax Breaks for Wealthy

Wednesday, 18 Apr 2012 10:29 AM

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Senate Majority Leader Harry Reid’s claim that there are “7,000 millionaires who didn’t pay a single penny in federal income taxes” is an inflated statistic with little relevance to the so-called Buffett rule, The Washington Post concluded in a fact check of the statement.

Reid, D-Nev., made the remark in a debate on a law that would impose a surcharge on people with gross adjusted income over $1 million. The Post noted that the White House, using IRS figures, said some 1,470 families “managed to pay no federal income taxes on their million-plus-dollar incomes,” the Post reported.

It turns out Reid was looking at “cash income,” not adjusted gross income, a figure that boosts the number of millionaires because it includes income exempt from income tax. Such income includes much of Social Security benefits, employer-paid health insurance premiums, and employer’s share of payroll tax, the Post reported.

“The definition of a millionaire in the proposed legislation is based on adjusted gross income, so Reid is taking substantial liberties by using an inflated figure,” the Post wrote.

The Post also pointed out there are a number of reasons someone making $1 million a year could be paying little or no taxes, such as the person could be retired, earning interest on municipal bonds, and reducing taxes through charitable deductions.

“Faced with a choice between using an actual IRS figure cited by the White House or using an inflated statistic with little relevance to the definitions in the bill, Reid chose the latter,” the Post concluded. “That sort of gamesmanship should not be excused, especially when his quote was repeated in news reports on the debate.”

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