Listening to Barack Obama's speech yesterday, you might have come away with the impression that millionaires everywhere pay less in taxes than their secretaries, as Warren Buffett has oft claimed. But that's hardly the case, according to an AP fact check. The claim relies on the fact that capital gains are taxed at a maximum of 15%, so those who gain most of their income through investments avoid some taxes. Others take advantage of various breaks and deductions; 1,470 millionaires paid no income tax last year.
But on average, people with more than $1 million in income pay 29.1% of their income in various federal taxes, according to Tax Policy Center figures, while households making $50,000-$75,000 pay just 15% of their income. Pressed on how many millionaires he thought were paying at a lower rate than middle-class families, Tim Geithner said it was true for those who made most of their income through investments. "So it really depends on what is your profession ... and the averages won't really capture that."