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Before you tell people that 47% of the country does not pay taxes, please look at the data. The problem isn't the American people. The problem is the American government.
On August 29th, the Tax Policy Center updated its projections of the number of Americans who have no Federal income tax obligation. The original report from 2009 was the genesis for the implosion of Mitt Romney's presidential campaign. Few times have 16 words been so expensive; "There are 47 percent of the people who will vote for the president no matter what."
Romney was blaming Americans for over dependence upon the government, when even modest research would have told him that the problem is the government dependence on tax credits for buying votes. According to Roberton Williams of the Tax Policy Center, the cost of tax credits has risen to nearly $1 trillion annually. So the government gave away in 2009 almost as much as it collected ($1.1 trillion).
Romney's statement refers to people not paying taxes in 2009. In 2009, the government passed the The American Recovery and Reinvestment Act of 2009. In it, we find educational subsidies, home buyers subsidies, home improvers subsidizes, healthcare subsidizes, and car subsidizes. We paid people to work. We paid people not to work. We paid people to be retired. We paid people to be children. It is surprising that anyone paid taxes.
Some want to cloud the issue by introducing what are at best irrelevant issues. When the Tax Policy Center says that 47% of households pay no income tax, it refers to the income tax only. TPC explains that "Fully two-thirds of households that pay no federal income tax have workers that pay payroll taxes." It also introduces a range of other taxes collected by the Federal government to suggest that the 47% probably do pay some taxes.
In the payroll tax, the government collects revenue in exchange for the promise of future benefits. Getting money today in exchange for a promise to repay that money isn't a tax. It is a loan. The Social Security Administration argues Social Security's portion of payroll taxes are "contributions to the social insurance system that is Social Security." While payroll taxes are collected under the power to tax, it is very difficult to argue that collecting revenue today in exchange for future revenue is a tax.
The Earned Income Tax Credit (EITC) is the reason that lower-income Americans get such a high return from Social Security. This credit was "designed to offset the burden of the Social Security payroll tax for low-wage workers with children." (Source Bill Clinton Page 14) It has been expanded since its inception in the mid-1970s. Of people not paying any federal income tax, they get an While the EITC is an offset for the cost of Social Security, roughly half of the 2/3rds get a refund that exceeds their entire payroll tax bill.
The reason that roughly 45% of the country pays no income tax is the government is obsessed with using the tax code as a tool of social policy. These people aren't dependent, they are simply catching some of the money that the government is throwing around.
Related Reading :
The Tax Policy Center provides some insight on the 2009 data. It provides insight on the 2013 data.
The Tax Policy Center provides information on the longer-term projections : ("T13-0228 - Tax Units with Zero or Negative Income Tax Liability Under Current Law")
On August 29th, the Tax Policy Center updated its projections of the number of Americans who have no Federal income tax obligation. The original report from 2009 was the genesis for the implosion of Mitt Romney's presidential campaign. Few times have 16 words been so expensive; "There are 47 percent of the people who will vote for the president no matter what."
Romney was blaming Americans for over dependence upon the government, when even modest research would have told him that the problem is the government dependence on tax credits for buying votes. According to Roberton Williams of the Tax Policy Center, the cost of tax credits has risen to nearly $1 trillion annually. So the government gave away in 2009 almost as much as it collected ($1.1 trillion).
Romney's statement refers to people not paying taxes in 2009. In 2009, the government passed the The American Recovery and Reinvestment Act of 2009. In it, we find educational subsidies, home buyers subsidies, home improvers subsidizes, healthcare subsidizes, and car subsidizes. We paid people to work. We paid people not to work. We paid people to be retired. We paid people to be children. It is surprising that anyone paid taxes.
Some want to cloud the issue by introducing what are at best irrelevant issues. When the Tax Policy Center says that 47% of households pay no income tax, it refers to the income tax only. TPC explains that "Fully two-thirds of households that pay no federal income tax have workers that pay payroll taxes." It also introduces a range of other taxes collected by the Federal government to suggest that the 47% probably do pay some taxes.
In the payroll tax, the government collects revenue in exchange for the promise of future benefits. Getting money today in exchange for a promise to repay that money isn't a tax. It is a loan. The Social Security Administration argues Social Security's portion of payroll taxes are "contributions to the social insurance system that is Social Security." While payroll taxes are collected under the power to tax, it is very difficult to argue that collecting revenue today in exchange for future revenue is a tax.
The Earned Income Tax Credit (EITC) is the reason that lower-income Americans get such a high return from Social Security. This credit was "designed to offset the burden of the Social Security payroll tax for low-wage workers with children." (Source Bill Clinton Page 14) It has been expanded since its inception in the mid-1970s. Of people not paying any federal income tax, they get an While the EITC is an offset for the cost of Social Security, roughly half of the 2/3rds get a refund that exceeds their entire payroll tax bill.
The reason that roughly 45% of the country pays no income tax is the government is obsessed with using the tax code as a tool of social policy. These people aren't dependent, they are simply catching some of the money that the government is throwing around.
Related Reading :
The Tax Policy Center provides some insight on the 2009 data. It provides insight on the 2013 data.
The Tax Policy Center provides information on the longer-term projections : ("T13-0228 - Tax Units with Zero or Negative Income Tax Liability Under Current Law")