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Americans paid the lowest federal tax rate in three decades during President Obama’s first year in office, according to a new government report out this week.
The Congressional Budget Office found that the average tax rate in 2009 was 17.4 percent, the lowest since 1979, and down from 19.9 percent in 2007. Although figures are only available through 2009, the CBO expects to see the historic lows maintained through 2010 and 2011.
(The Washington Post points out the irony: 2009 was the same year anti-tax protesters began their full-throated criticism of White House tax policies.)
In part, the tax decline was due to the dramatic decrease in average income that year, an effect of the Great Recession that caused many Americans to slide down into lower tax brackets. In 2009, the average household income was $88,400, according to the Financial Times, notably less than the $101,000 average in 2007. The top 1 percent of earners saw their income decrease by more than a third.
But, the low rates also reflect measures the Obama administration took to mediate the impact of the recession, including the “Making Work Pay” tax credit and other cuts bundled in the stimulus package. The lowest fifth of earners saw the most dramatic decrease, paying an average tax rate of 1 percent compared with 5.1 percent in 2007.
Only the top 1 percent of earners were exempt from the trend. Those in the top bracket, who earn approximately $1.2 million annually, paid a 28.9 percent federal tax rate, up from 28.1 the previous year, the Wall Street Journal reports.
Republicans and Democrats (shockingly!) are bickering over the implications of the CBO report. According to the Dems, the numbers prove the claims from across the aisle about Obama’s tax policies false. “However much Republicans try to perpetuate false claims, the facts speak for themselves,” Rep. Sander Levin, ranking Democrat on the Ways and Means Committee said. But a spokesman for the chair of the committee, Rep. Dave Camp, R-Mich., countered that the low tax rates prove just how low average American incomes slid under the president. “A weak economy and fewer jobs is nothing to cheer about.”