Tammy Baldwin says Tommy Thompson’s tax plan would cut taxes by $87,000 for the top 1 percent

If you haven’t heard U.S. Rep. Tammy Baldwin, D-Wisconsin, say she is fighting for the middle class in her bid for the U.S. Senate, you haven’t been listening.

But you can be forgiven. The gubernatorial recall all but filled Wisconsin’s political bandwidth until the election was held June 5, 2012.

Now, more attention will turn to Baldwin and the four Republicans seeking to succeed Democrat Herb Kohl in the November 2012 Senate election.
   
Baldwin sounded the middle class theme in attacking the best known GOP candidate, former governor Tommy Thompson, in a memo released to the media May 30, 2012.

She declared:

"Thompson’s tax plan amounts to an average tax cut of almost $87,000 for the top 1 percent."

The 1 percent are people with incomes over $343,000, according to the memo.

Sounds like a good deal for them. But is Baldwin on target?

Baldwin’s evidence

Baldwin campaign spokesman John Kraus said Baldwin's is based on a flat tax provision in a tax reform plan that Thompson released in April 2012.

Two paragraphs in the four-page document are devoted to the flat tax.

For two years, individual taxpayers could opt to file a tax return with a 15 percent rate, or file a return using existing exemptions. After two years, Thompson "would move to an across-the board flat tax with provisions to encourage savings, investment, home ownership and support for charities," the plan says.

Here’s the Baldwin math:

In 2009, according to the latest figures available from the Internal Revenue Service, the top 1 percent of federal income tax returns amounts to nearly 1.38 million people. They all earned more than $343,927.

That group generated just over $1.32 trillion in adjusted gross income, which resulted in a total of just over $318 billion in income taxes paid.

Had a 15 percent flat rate been in effect, the "1 percent" would have paid $198.7 billion in taxes or $119.3 billion less, under Thompson’s plan.

That means those taxpayers would have paid an average of $86,502 less in income taxes.

Thompson campaign spokesman Brian Nemoir noted that tax rates ranged from 10 percent to 35 percent in 2009 (as they do now). He said Thompson’s plan "better balances the nearly half of all Americans that don’t pay income taxes against the nation’s top 1 percent of earners, who pay 37 percent of the income taxes collected."

As for Baldwin’s figures, he said her analysis "seems sufficient."

While Thompson's proposal lacks enough detail for analysis, the Tax Policy Center evaluated the more detailed 15 percent flat tax plan advanced by Newt Gingrich during his 2012 run for the Republican presidential nomination. The center concluded that no one, regardless of income, would see a tax increase under Gingrich's plan. Under one scenario, which divided all taxpayers into five groups based on income, all five groups would get a tax cut under Gingrich's plan.

So, it’s likely Thompson’s plan would benefit many more groups than the 1 percent cited by Baldwin, who is using that approach to bolster her underlying point.

As for the specifics of Baldwin's claim, we ran her numbers by three tax experts: Tax Policy Center senior fellow Roberton Williams and Tax Foundation economist Mark Robyn, both in Washington, D.C.; and Wisconsin Taxpayers Alliance president Todd Berry in Madison.

All three said Baldwin is generally on target, but that Thompson’s plan is too short on details to know for sure whether Baldwin’s $87,000 figure is on the money.

Williams said Baldwin’s numbers, on their face, are accurate.

"It’s a back-of-the-envelope calculation, that’s what it is," said Robyn.

Robyn and Berry agreed the 1 percent would almost certainly get a tax break under Thompson’s plan, but they couldn’t say whether Baldwin’s figure is accurate because Thompson’s plan doesn’t specify what deductions and exemptions might remain under his flat tax and who would qualify for them.

"Her calculations are probably overstated a little, but we don’t know how much," said Berry.

Our rating

Baldwin said Thompson's tax plan "amounts to an average tax cut of almost $87,000 for the top 1 percent" and Thompson didn’t refute the figure.

Tax experts said Baldwin’s figure is in the ballpark, at least as an estimate, but that Thompson’s flat tax proposal lacks too much detail to know for sure.

Baldwin’s claim is accurate but needs additional information -- our definition of Mostly True.

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