In his Kansas speech yesterday, President Obama said that 25 percent of millionaires pay less taxes than the middle class and some billionaires pay taxes  at a rate as low as 1 percent. Surely, that remark caused some groans and deep skepticism among Obama’s critics.
But it turns out those claims have a lot of merit.
CNN reports that, in 2006 roughly one in four of those with adjusted gross incomes over $1 million paid a smaller portion of their income in federal taxes — income, payroll and corporate — than 10 percent of those with incomes below $100,000. That’s according to a recent study from the Congressional Research Service.
As for the president’s assertion that some billionaires have a tax rate as low as 1 percent, Roberton Williams, a senior fellow at the Tax Policy Center, told CNN that it’s definitely possible but hard to verify.
“Billionaires are still rare enough that we cannot get data for them without running afoul of privacy rules,” he said.
But for a lot of reasons, Chris Bergin, president and publisher of Tax Analysts, said, “It is certainly not implausible.”
As was widely reported a few months ago, in 2010 4,000 households with incomes over a million dollars owed no federal income tax whatsoever, according to Tax Policy Center estimates.
What’s more, according to CNN, of the top 400 federal tax returns with the highest adjusted gross incomes in 2008, 30 had an effective tax rate of less than 10 percent. Those figures come from Mark Luscombe, the principal federal tax analyst at CCH.
Sure, the rich have top-notch accountants who now how to find every loophole.
But the wealthy pay low tax rates for several basic reasons: a major portion of their income consists of capital gains, which are taxed at just 15 percent;  they engage in tax-averse partnerships; they take advantage of tax breaks granted for investments overseas; they make large charitable contributions that offer substantial tax write-offs; and they shift large amounts of cash into tax-free bonds.

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