Mitt Romney thinks the 47 percent of Americans who don’t pay federal income taxes are “takers” who leech off the remaining 53 percent. But the majority of the 47 percent pay payroll taxes, and most of the rest are elderly people who (presumably) paid income and payroll taxes during their working lives.
There are three main reasons why so many Americans do not pay federal income taxes.
- During the Clinton administration, the Earned Income Tax Credit was enacted as part of a program which reduced eligibility for welfare payments, under the theory that poor people should be given an economic incentive to work, even at poverty-level wages. In my opinion, this is a good thing, not a bad thing.
- During the Bush administration, income tax rates were cut for Americans in all tax brackets, which made the cuts for taxpayers in the upper brackets more palatable. In my opinion, it would be wrong to allow those tax reductions to expire for low-income Americans while retaining them for high-income Americans.
- As a result of the Great Recession, there has been a huge increase in the number of Americans who are unemployed or working for poverty-level wages. The best way to get them to pay income taxes would be to create a high-wage, full-employment economy.
Here is a breakdown of the different reasons the 47 percent do not pay income taxes.
Mitt Romney goes to extraordinary lengths to keep his U.S. income tax payments as low as possible. He said he pays just under 15 percent of his income in federal taxes. If your worthiness as an American citizen is based on what percentage of your income you pay in taxes, I am far more worthy than Mitt Romney.
Click on Memo to Mitt Romney: the 47% Pay Taxes Too for a report by Janet Novack in Forbes.
Click on Romney’s theory of the “taker class” and why it matters for comment by Ezra Klein on the Washington Post’s Wonkblog.
Click on Mitt Romney’s Offshore Accounts, Tax Loopholes and Mysterious IRA for a report in Vanity Fair about what’s known and not known about Romney’s finances.
Click on Controversial fund-raiser video shows candid Romney for CNN Political Ticker’s report on the video.
In the United States, there are income taxes, which fall most heavily on the rich; residential property taxes, which fall most heavily on the property-owning middle class; payroll taxes, which fall most heavily on wage earners; and sales and excise taxes, which fall most heavily on poor people. Why is it that income taxes are the only tax that right-wing politicians ever talk about reducing?
[Update] Not that it proves anything, but here is a map showing (in red) the 10 states with the highest percentage of non-payers of income taxes, and (in blue) the 10 states with the lowest percentage of non-payers of income taxes.
[Update II] Here is a breakdown by age of who pays income taxes and who doesn’t.
Then, too, there are a certain number of wealthy Americans who manage to avoid paying federal income taxes.