During a press conference on June 29, 2011, President Barack Obama was asked whether tax increases should be a part of a deal to approve a new debt ceiling -- the subject of long-running negotiations as the current statutory cap on federal debt approaches in August.



Obama said that he believes some types of revenue increases should be included. As part of his answer, he sought to provide some context about current levels of taxation, at least for the most highly compensated Americans.



"You can't reduce the deficit to the levels that it needs to be reduced without having some revenue in the mix," Obama said. "The revenue we're talking about isn't coming out of the pockets of middle-class families that are struggling -- it's coming out of folks who are doing extraordinarily well and who are enjoying the lowest tax rates since before I was born. If you're a -- if you are a wealthy CEO or a … hedge fund manager in America right now, your taxes are lower than they have ever been. They're lower than they've been since the 1950s."



We realize that Obama offered two different standards -- the lowest rates ever, and the lowest since the 1950s. We’ve decided to use the latter standard -- "since the 1950s" -- because the data is more consistent and easily accessible. (With one exception to fund the Civil War, there was no federal taxation prior to 1913.)



The most basic way to look at this question is to use the highest marginal rates for ordinary income -- what’s commonly called the "top tax bracket." This rate -- which today is 35 percent -- is applied to any money earned above a certain threshold. For 2011, that level is $379,150 for married couples filing jointly, for individuals and for heads of households, and $189,575 for married couples filing separately.



Assuming you’re talking about the "ordinary" income a CEO or a hedge fund manager earns -- a key assumption, which we’ll discuss in more detail later -- Obama is pretty close to right, but not 100 percent.



Between 1960 (when the "1950s" faded into history) and the 1980s, when Ronald Reagan pushed through landmark tax cuts, top tax brackets had much higher rates than those in place today. For instance, the top rate was 91 percent in 1960, and 70 percent on the eve of Reagan’s election in 1980.



By 1988, the top federal income tax rate fell to 28 percent, and it stayed there until 1990. It ticked up to 31 percent for 1991 and 1992, before rising to 39.6 percent in 1993.



So, for five tax years -- 1988 through 1992 -- the top tax bracket had a lower rate than today’s top bracket. Put another way, out of 52 tax years since 1960, the top tax rate was lower than today’s only 10 percent of the time. (Today’s top tax bracket has been steady since 2003, so in nine additional tax years, the earlier bracket was tied with today’s.)



That’s not exactly what Obama said, but it's close.



Now for the complications. First, hedge fund managers, who were specifically cited by Obama, typically don’t pay taxes on their income the same way other Americans do.



The bulk of hedge-fund managers’ income is typically considered "carried interest" -- that is, their share of profits from the funds they manage. When a fund has capital gains and those gains flow to the manager, they are taxed as a capital gain, not as ordinary income. From a taxation perspective, the difference is significant -- taxation can be as low as 15 percent, rather than the 35 percent paid by everyone else (including other types of Wall Street managers).



The 15 percent rate for capital gains has been in place since 2003, so tax rates for hedge-fund managers’ carried interest isn’t new. But 15 percent is the lowest it has been since 1950, said Eric Toder, co-director of the Urban Institute-Brookings Institution Tax Policy Center. So for hedge-fund managers, Obama’s statement looks correct.



There’s another complication. One more way to analyze Obama’s statement is by effective tax rates. An "effective" tax rate is what a typical taxpayer actually pays after deductions, exemptions and the like. It’s always lower than the statutory tax rate, sometimes significantly lower.



There’s data on this, but it’s a bit more scattershot and doesn’t go all the way up to 2011. But we’ll do a quick review of the data.



A 2007 study by economists Thomas Piketty and Emmanuel Saez calculated effective tax rates for various income groups.



For people whose income ranked between the top 1 percent and top 0.5 percent, the effective tax rate for individual, corporate, payroll and estate was 34.0 percent in 1960, 36.1 percent in 1970, 37.6 percent in 1980, 31.5 percent in 1990, 35.7 percent in 2000 and 31.3 percent in 2004.



For those earning between the top 0.1 percent and 0.5 percent of the income curve, the numbers were 41.4 percent in 1960, 44.6 percent in 1970, 43.0 percent in 1980, 33.0 percent in 1990, 38.4 percent in 2000 and 33.0 percent in 2004.



For those earning between 0.01 percent and 0.1 percent, the rates were 55.3 percent in 1960, 59.1 percent in 1970, 51.0 percent in 1980, 34.3 percent in 1990, 40.2 percent in 2000 and 34.1 percent in 2004.



Finally, for those in the top 0.01 percent of the income distribution, the effective tax rate was 71.4 percent in 1960, 74.6 percent in 1970, 59.3 percent in 1980, 35.4 percent in 1990, 40.8 percent in 2000 and 34.7 percent in 2004.



So for each of these elite income groups, the effective tax rates were at or near historical lows in 2004, though for certain groups, the effective rate was equal or slightly lower in 1990. Of course, this data is seven years old.



Meanwhile, the 2010 Economic Report of the President included a table that showed "that the effective tax rates that applied to high-income taxpayers reached their lowest levels in at least half a century in 2008." The table (labeled table 5-8) had data running back to 1960 and for both taxpayers earning at least $250,000 and taxpayers earning over $2 million. The table mirrors the Piketty-Saez data in that the 2008 levels are at or near lows for the period, with only the early 1990s coming close.



So where does this leave us? There’s some degree of uncertainty in making this kind of statement, since a very high-earning American’s tax rate can vary greatly, depending on the kinds of income earned (and what tax rate it’s subjected to) and the kinds of exemptions and deductions claimed on their return.



Even so, when Obama said that "if you're a … wealthy CEO or a … hedge fund manager in America right now, your taxes are … lower than they've been since the 1950s," he's close: Their tax rates are at or near the lows for the years elapsed since then.



The top marginal income tax rates were lower between 1988 and 1992 than they are today, but otherwise, Obama is right. They were higher for the other years. Meanwhile, the rates that are used to tax carried interest for hedge-fund managers have been at historical lows since 2003. And effective tax rates for high-income earners were either at their lowest since 1960 or very close to their lowest (at least according to the most recent data available). On balance, we rate Obama’s statement Mostly True.