Obama’s Conflict Of Interest: 47% Don’t Pay Taxes
September 19, 2012 10 Comments
Apparently we’re supposed to be outraged because Mitt Romney suggested that Obama’s supporters, around 47% of the country, don’t pay taxes. L.D. Jackson wonders where exactly Romney is wrong. Journalist “fact” checkers dismissed Romney’s statement as “wildly inaccurate.” In order to believe the “fact” checkers one has to ignore the facts. It’s true that most Americans pay payroll taxes. But when all of a person’s payroll tax is given back to them in the form of a refund then they aren’t paying any income tax. The Federal government could tax someone at the rate of 100% but if it’s all returned to them as a refund then their tax rate is 0%. The “fact” checkers expose their liberal bias again.
Romney isn’t far off in his analysis. We have a problem when nearly half the country isn’t paying any income tax while expecting the government to provide them with one service after another. What Obama is doing is trying to parlay zero taxes and maximum services into a formula for victory. It’s the FDR formula as he provided all sorts of goodies and bonuses via the WPA and other New Deal programs in the months before the 1936 and 1940 elections. Obama just last month eliminated the work requirement for welfare, as a result the number of able bodied people on food stamps doubled. What do you want to bet that those receiving new benefits thanks to Obama will vote for him?
Obama is on record as supporting wealth redistribution. Having nearly half the country not paying income taxes while expecting massive government services paid for by the half of the country that does pay income tax is wealth redistribution. Creating new government entitlements and paying them out two months before an election is the Democrats pathway to victory. Obama isn’t the one who came up with this sort of plan, it’s been on the books for 80 years in Democrat circles.
We have a choice this November even if we are to grant that Romney isn’t the most conservative candidate the GOP could have nominated. Romney favors free enterprise, free markets and he opposes massive wealth redistribution. Obama opposes free enterprise, tries to dismantle free markets and is on record supporting wealth redistribution. R0mney is against the idea of having 47% of Americans not paying income taxes. If the economy was stronger, half of these people would either have jobs or would see an increase in salary thus meaning they would be paying income tax. Obama wants no part of that, there’s an incentive for him to keep the economy stagnant and the people dependant on government. This is really what Romney’s saying, which is why the media is so enraged.
The media is desperately trying to destroy the Romney campaign. Whether its by unjustly attacking him after last weeks comments on Libya, whether its attacking his Bain Capital record, his wife’s horses or now this leaked video of a private speech given to donors, the media is clearly on the side of Barack Obama. Even their fact checks are full of left-wing bias. We’re getting to the point that this sort of bias treatment is going to backfire on the press and Obama. There’s nothing inaccurate about what Romney said, in fact his comments ring true and suggest a major problem for this country. We have a President and a party who are better served with a weak economy and a dependant electorate. The media won’t call it a conflict of interest but it’s painfully obvious that this is the case. Let them go wild, the public is likely to see through the nonsense.
About Steven
Perfect anaysis. I’ve never seen the media so biased as this. It’s as if we’re living in an alternate reality where lies are the new truth and Romney’s actual truth is an outrageous gaffe or mistake. I hope Americans are smart enoug to see through this.
You have to wonder if people even pay attention to the news anymore. Ratings for news programs are down and readership of newspapers and magazines is down.
Now Steve, you of course are not subject to a “conservative” bias. You can see the facts unclouded by your political ideology-unlike anyone who writes for the less than radical-right wing point of view. You are a true visionary. Sopmeone who is above the everyday blinders of ideology.
We agree that forty-seven per cent of American households owed no income tax.That number was up from 38 percent in 2007. Now 47 percent has become shorthand for the notion that the wealthy face a much higher tax burden than they once did while growing numbers of Americans are effectively on the dole.
Neither one of those ideas is true. They rely on a cleverly selective reading of the facts. So does the 47 percent number.
Given that taxes are one of the big political issues — and maybe the biggest one — it’s worth understanding who really pays what in taxes. Once you do, you can get a sense for our country’s fiscal options. How, in other words, will we be able to close the huge looming gap between the taxes we are scheduled to pay and the services we are scheduled to receive?
The answer is that tax rates almost certainly have to rise more on the affluent than on other groups. Over the last 30 years, rates have fallen more for the wealthy, and especially the very wealthy, than for any other group. At the same time, their incomes have soared and the incomes of most workers have grown only moderately faster then inflation so a much greater share of income is now concentrated at the top of distribution, while each dollar there is taxed less than it once was. It’s true that raising taxes on the rich alone can’t come close to solving the long-term budget problem. The deficit is simply too big. But if taxes are not increased for the wealthy, the country will be left with two options.
It will have to raise taxes even more than it otherwise would on everybody else. Or it will have to find deep cuts in Medicare, Social Security military spending and the other large federal programs.
All the attention being showered on “47 percent” is ultimately a distraction from that reality.
The 47 percent number is not wrong. The stimulus programs of the last two years — the first signed by President , eorge W. Bush, one by Obama, the number of households that receive enough of a tax credit to wipe out their federal income tax liability.
But the modifiers here — federal and income — are important. Income taxes aren’t the only kind of federal taxes that people pay. There are also payroll taxes and investment taxes, among others. And, of course, people pay state and local taxes, too.
Even if the discussion is restricted to federal taxes (for which the statistics are better), a vast majority of households end up paying federal taxes. The Congressional Budget Office states that, at most, about 10 percent of all households pay no net federal taxes. The number 10 is obviously a lot smaller than 47.
The reason is that poor families generally pay more in payroll taxes than they receive through benefits like the Earned Income Tax Credit. It’s not just poor families for whom the payroll tax is a big deal, either. About three-quarters of all American households pay more in payroll taxes, which go toward Medicare and Social Security, than in income taxes.
Focusing on the statistical middle class — the middle 20 percent of households, as ranked by income — underlines this point. Households in this group made $35,400 to $52,100 in 2006, the last year for which the Congressional Budget Office has released data. That would describe a household with one full-time worker earning about $17 to $25 an hour. Such hourly pay is typical for firefighters, preschool teachers, computer support specialists, farmers, members of the clergy, mail carriers, secretaries and truck drivers, according to the Bureau of Labor Statistics.
Taking into account both taxes and tax credits, the average household in this group paid a total income tax rate of just 3 percent. A good number of people, in fact, paid no net income taxes. They are among the alleged free riders.
But the picture starts to change when you look not just at income taxes but at all taxes. This average household would have paid 0.8 percent of its income in corporate taxes (through the stocks it owned), 0.9 percent in gas and other federal excise taxes, and 9.5 percent in payroll taxes. Add these up, and the family’s total federal tax rate was 14.2 percent.
I realize that it’s possible to argue that payroll taxes should be excluded from the discussion because they pay for benefits — Social Security and Medicare — that people receive on the back end. But that argument doesn’t seem very persuasive.
Why? People do not receive benefits equal to the payroll taxes they paid. Those who die at age 70 will receive much less in Social Security and Medicare than they paid in taxes. Those who die at 95 will probably get much more.
The different kinds of federal taxes are really just accounting categories. At the end of the day, the government has to cover the cost of all its operations with revenue from all its taxes. We can’t wish our deficit away by saying that it’s mostly a Medicare and Social Security deficit.
If anything, the government numbers I’m using here exaggerate how much of the tax burden falls on the wealthy. These numbers fail to account for the income that is hidden from tax collectors — a practice, research shows, that is more common among affluent families. “Because higher-income people are understating their income,” Joel Slemrod, a tax scholar at the University of Michigan, says, “We’ve been overstating their average tax rates.”
State and local taxes, meanwhile, may actually be regressive. That is, middle-class and poor families may face higher tax rates than the wealthy. As Kim Rueben of the Tax Policy Center notes, state and local income taxes and property taxes are less progressive than federal taxes, while sales taxes end up being regressive. The typical family pays a lot of state and local taxes, too — almost half as much as in federal taxes.
There is no question that the wealthy pay a higher overall tax rate than any other group. That is an American tradition. But there is also no question that their tax rates have fallen more than any other group’s over the last three decades. The only reason they are paying more taxes than in the past is that their pretax incomes have risen so rapidly — which hardly seems a great rationale for a further tax cut.
So why are those radio and television talk show hosts spending so much time arguing that today’s wealthy are unfairly burdened? Well, it’s hard not to notice that the talk show hosts themselves tend to be among the very wealthy.
No doubt, like the rest of us, they don’t particularly enjoy paying taxes. They are happy with the tax cuts they have received lately. They would prefer if other people had to pick up the bill for Medicare, Social Security and the military — people like, say, firefighters, preschool teachers, computer support specialists, farmers, members of the clergy, mail carriers, secretaries and truck drivers.
I know though, if I were Mitt Romney, making a few hundred million dollars a year and paying at only a 14% tax rate I wouldn’t be complaining about a low income worker or retiree not having to pay federal taxes on a yearly income of less than $50,000.00. Seems like the current tax system is working pretty damn nicely for Mr. Romney.
Dissertation much? Look, 47% paid no income taxes, up dramatically from 2007. That does not say that the wealthy are paying more than they did a few years ago, though the percentage of what they pay in total Federal revenues is up. This really has nothing to do with the wealthy though, the issue is about Obama’s desire to keep the economy down and voters dependant so he can win re-election.
‘Over the last 30 years, rates have fallen more for the wealthy, and especially the very wealthy, than for any other group. ‘
Clearly not. Some had their tax rates cut 100% to zero.
Just look at the Bush tax rate reductions. In addition to those getting a rate cut to zero, other low income earners had their’s cut from 15% to 10%. That’s a 1/3 reduction in rates. Far more than the mere drop from 39.6% to 35% (“the wealthy’s” cut).
This is true. The top 5% pay 60% of all income taxes. Yet any cut is considered an outrage by the left and an example of the rich not paying their fair share.
Quote from you: “What do you want to bet that those receiving new benefits thanks to Obama will vote for him?”
Actually Steve, research has shown that there is no link between receiving a government benefit and political preference.
Mitt Romney asserted that the 47 percent of Americans who had no federal income tax liability would “vote for the president no matter what.”
Actually, a lot them don’t vote, and of those who do, many vote Republican.
There is, unfortunately, no data linking federal income tax rates directly to voting behavior. But we do have some demographic information about those 47 percent (technically, 46 percent, if you’re looking at the most recent year of data) of American households that don’t pay federal income taxes, and we can use those demographics to make some educated guesses about how those people might vote.
About half of people who don’t owe federal income tax owe nothing because their incomes are too low; that is, all of their income is exempted after they take the standard deduction and personal exemptions for taxpayers and their dependents. For the most part, these households make less than $30,000 a year.
In 2008, when voter turnout rates were at or around record highs, fewer than half (44.9 percent) of adults in households making less than $30,000 per year voted, according to Census Bureau data. And of those who did vote, a substantial chunk voted for John McCain, the Republican candidate: 25 percent of those making under $15,000, and 37 percent of those making $15,000 to $30,000.
What about the rest of households who don’t pay federal income taxes?
This group generally doesn’t pay federal income taxes because of various deductions and credits in the tax code, known as “tax expenditures.”
According to the Tax Policy Center, about three-quarters of these remaining households pay no income tax because of tax expenditures that benefit older people and low-income working families with children.
Older Americans vote in very high numbers. In 2008, 70.2 percent of people over age 65 voted, according to the Census Bureau. And in that election, older voters supported John McCain over President Obama by an eight-percentage-point margin, with 53 percent voting for Mr. McCain. The latest New York Times/CBS News poll, conducted last week, showed likely voters in the same age group supporting Mr. Romney by a 15-point margin – even wider than the gap on Election Day 2008.
It’s probably fair to assume, then, that many of the people who don’t pay federal taxes because they’re benefiting from expenditures aimed at older Americans will vote for Mr. Romney, not Mr. Obama.
Those benefiting from tax provisions for low-income working families with children are, by definition, poor, and as we’ve established, poor people lean strongly Democratic but they don’t vote in very high numbers.
The remainder of the households that don’t pay federal income taxes because of other miscellaneous tax expenditures (tax-exempt interest, itemized deductions, capital gains rates and so forth) are harder to pin down demographically, so it’s challenging to make educated guesses about their likely voting behavior.
Mr. Romney also said that this “47 percent” of people who don’t pay federal income taxes are the same people who are “dependent” on government services:
All right, there are 47 percent … who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you name it.
First of all, the nonpayers can’t be conflated with the service receivers; people of all incomes and tax liabilities receive government services, not just those who have no federal income tax liability.
Are the people who do depend more heavily on government benefits at least more likely to vote Democratic, regardless of their tax burdens? Maybe those are the people Mr. Romney had intended to imply would vote for Mr. Obama “no matter what.”
But as a portrait of the social safety net in The New York Times found last spring:
Support for Republican candidates, who generally promise to cut government spending, has increased since 1980 in states where the federal government spends more than it collects. The greater the dependence, the greater the support for Republican candidates.
Amazing isn’t it!
“This really has nothing to do with the wealthy though, the issue is about Obama’s desire to keep the economy down and voters dependant so he can win re-election.” Really? Only a right-wing conspiracy nut could write something like that. You actually believe that it is a better strategy to win this election for Obama by keeping the economy stagnant rather than having low unemployment with increasing individual incomes? Really? You know even the conservative God, William Kristol is getting upset about Republican statements these days-in fact he called Romney’s speech condemning 47% of voters who do not pay federal income taxes as “stupid and ignorant”. Your statement about keeping the economy down is also pretty much in the same category. Maybe you should take up a gardening blog?
Thanks for the link, Steven. I believe it is important that we keep hammering away at this. To be sure, the media is on the side of our President and have no intention of allowing the truth about his policies to see the light of day. At the same time, they are doing everything in their power to make sure Mitt Romney has to fight to get his point across to the American people. I’m not sure he is winning that fight.
Romney absolutely is not winning that fight right now. The media has created one crisis after another for Romney to deal with, which has gotten his campaign completely off message. The media/Democrat strategy is pretty clear at this point. They’re going to create a crisis each week for Romney to keep him off message. You know they’re saving the Mormon Church racism distraction for October, he has to know that’s coming. Romney’s only way out of this problem is to ignore the media and defeat Obama in the debates. I question his ability to do either of those tasks.