Saturday, April 17, 2010
Following up on my post, New York Times, Yes, 47% of Households Owe No Taxes; Look Closer:
Yesterday was "tax day," the official filing deadline for federal income taxes in the United States. (Actually, anyone can receive an automatic six-month extension to file, if they submit a simple form and pay a reasonable estimate of their tax liability. But no matter.) The media's Pavlovian coverage of anti-tax protests focused on this year's big talking point from right-wing politicians and pundits: the estimate (which has been available since last June yet managed to emerge just in time for April 15 punditry) that roughly 47% of all taxpayers will have zero net federal income tax liability for 2009. Here, I will run through some of the obvious ways that that number is being used to dishonest effect. Most of these points, happily, have already been made in prominent news outlets; but the dishonest claims continue unabated. I will then address a more fundamental question: Would it really be bad if large numbers of people paid no taxes at all?
Last June, my colleague Bob Williams posted a TaxVox article that reported 47 percent of American households paid no federal income tax in 2009. Bob was exactly right, but rarely has a bit of data been so misunderstood, or so misused.
Let me explain—repeat actually—what this means: About half of taxpayers paid no federal income tax last year. It does not mean they paid no tax at all. Many shelled out Social Security and Medicare payroll taxes. In fact, only 14 percent of Americans didn’t pay either income or payroll taxes. Some paid property taxes and, it is fair to say, just about all of them paid sales taxes of one kind or another. So to say they pay no taxes is flat wrong.
However, this class warfare-like rhetoric plays to a perception that the income tax is a chump tax: Only hard-working folks like us pay it. The welfare queens don’t. The super-rich don’t. It is a powerful emotional argument. It is also flat wrong.
- New American, 47 Percent Pay No Taxes? Actually, No.
- USA Today, When 47% Don't Pay Income Tax, It's Not Healthy for USA