A recent report showed that many billionaires pay a lower tax rate than the average person making $45,000.
Sen. Ron Johnson (R-WI) told a constituent on Wednesday that the very richest Americans already pay their fair share in taxes.
In a telephone town hall, a truck driver from Lac du Flambeau, Wisconsin, asked Johnson about possible tax relief for truckers, saying that the 2017 Tax Cut and Jobs legislation had resulted in drivers having to pay more due to the loss of an exemption for per diems. She said her taxes had increased by $900 in the first year and had remained higher since.
Johnson responded, "Okay, well, I can't make any promises to you." He then pivoted to attacking President Joe Biden's $3.5 trillion Build Back Better proposals.
That package would raise taxes on corporations and those making more than $400,000 annually, but would also cut the overall federal tax burden for lower- and middle-income families.
Unfortunately, now the party in power, they're all about increasing taxes. And it's one of the reasons I'm obviously opposed to this Democrat reconciliation package, because they're going to be spending, at a minimum, $3.5 — it's more like $5.5 trillion, they can say they're gonna pay for it, so that means massive tax increases, and you simply can't squeeze all this, all the revenue they need out of the top 1%. You just can't. The top 1% has — and by the way, there will always be a top 1%. It actually does, there's churn within that, people come and go. But the top 1% owns about 20% of the nation's assets. But they pay 40% of the nation's income tax. I mean, at some point in time, we got to go, "Well, it's probably pretty close to a fair share." So I'm not into punitive taxation, I'm into fair.
The truck driver noted that the 2017 tax law, which Johnson voted for, had helped wealthy business owners: "I'm very well aware that my boss did very good under the tax plan, and he actually has a picture of you on his desk. So he's a strong supporter of you."
That legislation reduced the income tax rate for top earners from 39.6% to 37% and slashed corporate rates from 35% to 21%.
It also raised taxes for about 10 million American families, in part because of eliminated deductions.
Johnson made a similar argument about "the top 1% paying 40% of the income tax" in an August radio interview.
A Johnson spokesperson did not immediately respond to an inquiry for this story.
His number is misleading. While the top 1% pays about 40% of the federal individual income taxes in the United States, that figure does not include other federal taxes that disproportionately affect lower-income earners. The payroll taxes for Social Security and Medicare, for example, are collected on only the fraction of the wealthiest Americans' income that comes from salaries but make up a huge portion of the income tax burden for working families.
In all, according to the Institute on Taxation and Economic Policy's July 2020 data, the top 1% of Americans earn about 20.9% of the total income and pay about 24.3% of the total taxes.
Moreover, many of the very wealthiest people are able to pay at a lower rate than middle-class families.
A June report by ProPublica based on an examination of Internal Revenue Service data on thousands of the richest Americans concluded that "the wealthiest can — perfectly legally — pay income taxes that are only a tiny fraction of the hundreds of millions, if not billions, their fortunes grow each year."
It found the richest 25 people in the country paid a true tax rate of just 3.4%, with many of these billionaires paying at a lower rate than the average person making $45,000.
Johnson, who has an estimated net worth of nearly $40 million, has also been under fire for paying little in taxes. The Milwaukee Journal Sentinel reported on Sept. 30 that Johnson paid just $2,105 in state income taxes in 2017 — while earning $174,000 as a U.S. senator and at least $276,000 from other sources.
Most Americans, even members of Johnson's own party, disagree with his assessment that the wealthiest Americans are paying plenty.
A September poll by Data for Progress and Invest in America found likely voters back Biden's Build Back Better package (62% to 30%).
By a 64%-28% majority, voters supported the provisions that would raise income taxes on Americans making above $400,000. Among Republican voters, that idea was supported 51%-42%.
Published with permission of The American Independent Foundation.