WASHINGTON – As thousands of anti-tax protesters rallied across the nation Wednesday and the president promised tax cuts for most, new data showed that the federal income tax burden is already hovering near its lowest level in three decades for all but the wealthiest Americans.
The nonpartisan Congressional Budget Office estimates that the average family forked over barely 9 percent of its earnings to the IRS in 2006, the most recent year for which information is available. The effective tax rate hit its all-time low in 2003 and has crept up only slightly since.
Middle-class families – to whom President Obama has delivered even more tax relief since he took office in January – have fared especially well, according to the CBO. The middle fifth of taxpayers, who earned an average of $60,700 per household in 2006, paid just 3 percent in federal income tax that year, down from a high of 8.3 percent in 1981.
With federal income taxes so low for so many families, a majority of those surveyed by Gallup last week said the amount of federal income taxes they pay is either “too low” or “about right,” compared with 46 percent who said their tax bills are “too high” – one of the most positive assessments of the federal tax burden since Gallup began asking the question in 1956.
Gallup analysts said the poll results may also reflect confidence in Obama’s pledge not to raise taxes on families making less than $250,000 a year, a vow he repeated Wednesday in a tax-day speech at the Old Executive Office Building. Obama presented nine taxpayers who he said were better off because of tax breaks enacted in the recent economic stimulus package, including a tax credit for working families worth up to $800 this year.
Still, thousands of protesters marked the day federal income taxes were due by attending hundreds of “tea parties” from Florida to Hawaii, organizers said. The rallies were promoted by FreedomWorks, a conservative nonprofit group led by Dick Armey, a lobbyist and Texas Republican who once served as House majority leader.
In a pre-rally telephone interview from Atlanta, where he was preparing to speak on the steps of the statehouse, Armey conceded that “the federal tax rate right now is at a good level.” But, he said, “there are very few people who believe Obama will be content to leave it at that.”
Armey said the real target of the protesters’ ire is not the current tax rate but the much higher one that will be needed to pay for trillions of dollars in financial-sector bailouts; the stimulus package, which is projected to add nearly $800 billion to the federal debt over the next 10 years; and Obama’s ambitious health-care and education initiatives, which are projected to raise the debt by trillions of dollars more.
“There’s no way he can do the spending he does and cut taxes for most people,” Armey said. “People know that spending inevitably means more taxes.”
The White House stuck to its own low-taxes message Wednesday, as Obama repeated his “clear promise that families that earn less than $250,000 will not see their taxes increase by a single dime.” Asked whether Obama is confident that he can stick to that pledge throughout his administration, press secretary Robert Gibbs told reporters: “He is. He is. He is.”