Claim: “I’m going to estimate, 25 percent, give or take.”
Speaker: Democrat Walter Dalton at gubernatorial debate Wednesday.
Context: In the first televised debate, the candidates for governor were asked this question: “Can each of you tell me the approximate tax rate you paid last year?”
The subject is ripe this election season because Republican Pat McCrory won’t release his personal tax returns amid questions about his job as a consultant at a law firm that lobbies state government and the controversy in the presidential race about Mitt Romney’s taxes.
McCrory refused to answer the question. But Dalton guessed at 25 percent.
Dalton released his taxes to the public earlier this year, so The News & Observer asked a couple tax experts to take a look.
It turns out Dalton paid an average federal tax rate far below his estimate: 14 percent. Roby Sawyers, a certified public accountant and N.C. State University accounting professor who determined the numbers, said Dalton’s combined federal and state average tax rate was 21 percent.
Dalton’s taxable income in 2011 – $102,036 – does put him in the 25 percent federal marginal tax bracket. Told the numbers, Dalton’s campaign said his answer in the debate referred to his tax bracket, not the tax rate, as the question asked.
As with most people, Dalton pays far less than his upper tax rate because of the tiered tax system. Gerald Townsend, a CPA with Townsend Asset Management in Raleigh, said the first $17,000 of Dalton’s taxable income (as a married joint-filer) was taxed at 10 percent, the next $52,000 at 15 percent and the rest at 25 percent. The dividend portion of his taxable income was also taxed at a much lower rate than wages.
The year before, in 2010, Dalton paid a 15 percent average federal tax rate and a 22 percent average combined tax rate.
Ruling: Dalton’s answer hit his tax bracket but not his federal average rate, so his statement was mostly true.