The Obamas Paid a 20% Effective Tax Rate -- Yours Is Probably Higher
NEW YORK (MainStreet) Before you click "send" to e-file your taxes or lick the stamp to mail them in, do a quick calculation: check your tax form and divide your "total taxes" by your "adjusted gross income" to determine your effective tax rate. For example, President Obama and the First Lady filed their joint return for 2013, paying $98,169 in federal taxes on $481,098 in income. That's an effective tax rate of 20.4%. Bet that's lower than yours.
According to the Tax Foundation, the average U.S. taxpayer has seen his tax burden rise from 29.8% to 31.3%, since 2005.
"That's mainly due to the expiration of the lower rate on payroll taxes at the start of 2013," says Andrew Lundeen, in a Tax Foundation report. "In the U.S., the top 10% of taxpayers earn 33.5% of the income, but pay 45.1% of the taxes."
But the President and First Lady reduced their tax burden with generous gifting, donating $59,251 or about 12.3% of their adjusted gross income to 32 different charities. The largest reported donation was $8,751 to the Fisher House Foundation.
"The President pushed for and signed into law legislation that makes the system more fair and helps the middle class by extending tax cuts to middle class and working families and asks the wealthiest Americans to pay their fair share," press secretary Jay Carney said in a White House report. "In 2013, as a result of his policies, the President was subject to limitations in tax preferences, as well as additional Medicare and investment income taxes, for high income earners."
But the President is less of a high income earner than any other year since taking office and has, in fact, seen his income fall to its lowest level in a decade. Obama's income has dropped from a peak of $5.5 million in 2009, and he is making the least amount of money since 2004.
The Obamas will be receiving a tax refund of $19,108.
--Written by Hal M. Bundrick for MainStreet