Updated at 9:45 p.m. with figures provided by the Bachmann campaign
Ottumwa, Ia. – Michele Bachmann told a crowd here that growing tax burdens have undermined the American middle class and forced both parents into the workforce.
To support her argument, she said tax rates in 1950 were just 5 percent – a fraction of the overall tax rate today.
“The average amount of taxes that the average family (paid) was 5 percent overall,” Bachmann said.
With taxes that low, she continued, her father’s salary from the Air Force was enough to support her entire family. “A sergeant could have a wife and four children and the wife didn’t have to work because you paid 5 percent for your overall tax burden.”
But her figures do not appear to be accurate. According to the nonprofit Tax Foundation, the overall tax rate in 1950 was actually 24.6 percent – almost five times the rate cited by Bachmann and just 3.1 percent less than the 2011 tax rate of 27.7 percent.
The apparent error undermines Bachmann’s central point, which is that the tax burden is primarily responsible for forcing both parents to work and other substantial changes to middle-class financial life over the past several decades.
The Bachmann campaign responded this afternoon that the 5-percent figure comes from the Taxpayers League of Minnesota, and that Bachmann has cited it for several years.
This evening, a campaign spokeswoman provided two documents that she said were the sources Bachmann relied on when making her comments. The spreadsheets, which contained no information identifying their source, show federal, state and local tax receipts as a percentage of the United States’ gross domestic product over the last several decades.
One of the documents shows that federal receipts on individual income taxes represented 5.8 percent of national GDP in 1950 — meaning that the total of all individual income taxes paid to the federal government amounted to 5.8 percent of the value of all goods and services produced within the United States in that year.
But correlating figures that encompass the entire economy — like total income taxes paid and GDP — to the tax burden and incomes of the “average” family overlooks several complexities.
For one, income tax rates vary depending on a taxpayer’s income and whether they qualify for deductions and other tax breaks. Under the progressive income-tax system, moreover, high-income earners pay more in individual income taxes than do “average” income earners.
And more significantly, GDP encompasses the entire economy — including corporate profits and investment income — not just household incomes. If individual income taxes paid were calculated as a percentage of household incomes, the number would naturally be higher than 5.8 percent, since household incomes are just one part of the total GDP.
OTHER THEMES: After Bachmann repeated her call for the repeal of the federal health care law passed in 2010, a young man in the audience asked whether she would preserve the law’s ban on health insurers denying coverage to people with preexisting conditions.
No, she said, because barring insurers from denying such coverage makes coverage for everyone more expensive.
“Insurance companies know with this preexisting conditions thing that they have to jack up their rates to pay for everyone,” Bachmann said. “That’s also a cost to everyone who’s in this room.”
The man who asked the question, Brett Livengood of Dubuque, said he was disappointed that Bachmann didn’t have a plan to preserve coverage for those with preexisting conditions. Her solution seemed to be that the free market would work out that problem, he said. But that’s how things were before the law was passed, and the market simply excluded coverage for those people or charged them unaffordable rates.
On Immigration, Bachmann suggested the federal government could pass a law barring citizenship to children born in the United States to illegal immigrants. “We’ve got to end this anchor-baby program,” she said.
SETTING: The Bridge View Center, Ottumwa.
CROWD: About 60.
THE CANDIDATE’S DAY: Bachmann addressed a church congregation in Fairfield Saturday morning before holding the town-hall in Ottumwa and was scheduled to hold a second town-hall in Oskaloosa later in the afternoon.
PLACE IN THE RACE: Today’s events continue a three-day swing through southeast Iowa, which Bachmann hasn’t visited since before the Iowa Straw Poll. She followed Highway 61 through Davenport, Muscatine and Burlington on Friday and will address another church congregation in Marion tomorrow. Reaching out to evangelicals is seen as critical for Bachmann, who has fallen sharply in the polls since winning the August straw poll. Socially conservative Christians are famously enthusiastic caucus participants and potentially could boost a candidate otherwise unpopular with the Republican base.