Saturday, April 23, 2011

Why 47% of People Pay No Federal Income Tax

Because they are paying other taxes (via Mark Thoma):
Here's another way to put it. Americans pay different kinds of taxes to different entities. State and local taxes tend to be regressive. Payroll taxes, which fund Social Security and Medicare, are also regressive. To balance this out, we have a pretty progressive income tax. If you focus only on the income tax, it makes it look like the rich are getting screwed. But of course the income tax is just one element. And conservatives are working hard to make the tax code more regressive at every level of government.
The other trick is to describe the share of taxes paid by the rich in isolation. Wow, 1% paying 38% of the taxes! It sounds unfair. You intuitively think that 1% should be paying more like 1% of the taxes. But, of course, that number leaves out the proportion of the income earned by the rich. Indeed, as the rich earn a greater share of the income, their share of the tax burden rises as well. Conservatives in turn cite this fact to justify lower taxes on the rich.
It's pure propaganda, and what it lacks in quality it makes up in quantity. The right seems to have an unlimited number of talking heads, columnists, and pseudo-economists willing to peddle this nonsense.
What did the Wall Street Journal call people who had lower incomes and didn't owe federal income taxes, Lucky Duckies?  What a bunch of rich, ignorant jackasses:
And one "lucky ducky" wrote to the Journal editor, offering to share his luck (in a form of logical argument sometimes known as a modest proposal):
I will spend a year as a Wall Street Journal editor, while one lucky editor will spend a year in my underpaid shoes. I will receive an editor's salary, and suffer the outrage of paying federal income tax on that salary. The fortunate editor, on the other hand, will enjoy a relatively small federal income tax burden, as well as these other perks of near poverty: the gustatory delights of a diet rich in black beans, pinto beans, navy beans, chickpeas and, for a little variety, lentils; the thrill of scrambling to pay the rent or make the mortgage; the salutary effects of having no paid sick days; the slow satisfaction of saving up for months for a trip to the dentist; and the civic pride of knowing that, even as a lucky ducky, you still pay a third or more of your gross income in income taxes, payroll taxes, sales taxes and property taxes.
And yet Republicans always trot out their "rich people pay too much bullshit."

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