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It’s a Lie That Working Poor Don’t Pay Taxes
In this age of afflicting the poor and comforting the rich — a favorite pastime of the tea partiers and the new Republican Party they’ve helped shape — there’s a popular myth making the rounds on the Internet that nearly half of working Americans don’t pay taxes, and isn’t that an outrage?
Candidates like Michele Bachmann and Rick Perry, the Texas motor mouth who believes Social Security is a Ponzi scheme, help build this perception, insisting that before restoring the pre-George W. Bush taxes on the rich we need to make everyone pay some federal income tax.
Bachmann says the lower-income workers, after all, use the parks and roads and benefit from defense measures the government provides to keep us all safe. Perry claims that it’s an “injustice” that so few American citizens pay income taxes. Of course, in Texas they don’t have any personal state income tax at all, just the highest percentage of uninsured and a growing unemployment rate. Perhaps that explains a lot.
But the truth is that every working American pays taxes. Before they even get a chance to cash their paychecks, 6.2 percent has been deducted for Social Security and another 1.45 percent for Medicare. (This year the Social Security payroll tax for everyone has been temporarily lowered to 4.2 percent as part of President Obama’s stimulus program.)
In other words, they’re contributing just as big a percentage of their income to the two major federal budget programs as do the CEOs of major corporations. In fact, because people don’t pay Social Security taxes on income over $106,800, the poor actually pay a higher percentage than the wealthy.
Everyone also pays sales taxes, property taxes if they own property or indirectly if they rent, gasoline taxes to build those roads Bachmann thinks they’re driving on for free, and fees to visit national parks and license their cars, just for starters.
It’s true that the lower half of wage earners, many of them living on the edge of poverty, wind up escaping additional income taxes, but that’s because at one time in this nation’s history we decided to tax citizens on their ability to pay because we believed it was the right thing to do. The Christian way, if you please.
It was considered quintessentially American for the wealthy to shoulder a larger share of the load it requires to run the country’s business. If you didn’t make a lot, you didn’t pay a lot. If you made a bundle, you paid a bundle for the good of the nation.
Indeed, for decades during the mid-1900s, the richest people in America paid a federal income tax rate of 90 percent of every dollar they made over $1 million. Interestingly, the country got along just fine. Businesses expanded. The middle class came into vogue. Young couples could buy houses, afford cars and eventually send their kids to college.
It was all quite unlike today after George Bush saw to it that the wealthiest in the land got a 10 percent tax cut — 39.6 percent to 35 percent for the highest bracket — and now, in the face of a growing national debt, the Boehners and Cantors in Congress refuse to even consider restoring the old rate. Those cuts contributed mightily to turning a national budget surplus into a huge deficit, especially when decisions were made to fight expensive wars and increase defense spending without raising any additional revenue.
And now Boehner and Cantor don’t even want those making a million or more a year to have to pay a dime extra, as the president has proposed.
Not coincidentally, it was this same wealthy class that hatched the mortgage schemes, played recklessly with people’s savings and crashed the economy. Not only have they escaped any penalties for their disgraceful behavior, but the GOP believes it’s the working people who need to take the hit to reduce the deficit.
America’s middle class has already paid more than its fair share. They’ve suffered pay cuts, layoffs, lost homes and cars and now close to one in six of them live in poverty. To ask them to face a future with weaker Social Security and Medicare programs is nothing short of criminal.
It’s well past time for those who can afford it and who have benefited the most from government’s many services to pitch in and help right the ship — at the very least, end the Bush tax cuts and help restore some fiscal responsibility to the nation’s budget.
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28 Comments so far
Show AllSo the "pre-George W. Bush" era was fine, then? EVERY administration starting with Eisenhower has lowered the highest tax bracket, and Obama of course extended the GW Bush tax cuts.
Yet another article on here pretending that only people with an "R" after their names are the problem.
The point people don't get is that the LOWEST rate was from Zero income up to $64,000. At that point rates went up and up.
That's the trick the politicians used to argue for lower taxes on extreme wealth - lower the income level which is subject to the Top Tax Rate as a strategy to get ALL Americans to fight for lower taxes for the wealthy freeloading predators.
Worked like a charm.
Actually, the jump to 15% for a single person occurs at $17,725 and the jump to 25% ocurs at $43,350.
But for married filing jointly, no kids, the jump to higher brackets are about $30,000 and $81,000.
So your point is even more well-taken. The tax rates seem calculated to push the modest income, single/divorced, child-support paying angry-white male to the extreme right's agenda.
Actually, the biggest reductions happened in the Reagan ( two reductions) and the G.W. Bush administrations. After the second drop in the 1980s, I looked at my tax records before and after it. Although my income was flat during that period, my income tax went up.
The reason was that in lowering the top tax brackets, they also closed some "loopholes" (to assure us they were also going after the "fat cats"). We could no longer deduct the interest on consumer loans such as on credit cards or car loans, so my taxes went up.
Of course, the millionaires were also affected. After all, they could no longer deduct losses on their cattle ranches or NFL teams. I might have felt sorry for them, but I knew that reducing the top rate from about 90% to about 50% saved them much more than the cost of the few loopholes that were closed.
So it was, in fact, the Republicans who did this to us.
No it wasn't "the Republicans who did this to us!" Not without MAJOR help from the Democrats.
Look at this chart:
http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=213
Top tax rate under Reagan:
1981: 69.13%
1982-1986: 50%
1987: 38.5%
'88-'89: 28%
GHW Bush raised the top rate to 31%, then Clinton to 39.6%.
Under Obama:
2009-2011: 35%
A LOT more taxes were collected from the rich even under Reagan (of all people) than under Obama and Clinton, with the Dems having had total control of both houses of Congress in 4 of those Dem president years.
That's before we get to the corporate tax burden (or "burden"), which has shifted apace from the corporations to regular people regardless of which party of thieves is in office.
So under Reagan and the early Bush years, the top rate was lowered from 69% to 28%. Then by the end of Slick Willie's "reign" it was back up to almost 40%, but the Democrats didn't raise taxes, according to you, because the top rate was still under 70%.
You've got to be kidding. You may be an actual leftists, or not, but you're certainly a bullshitter if you think not raising the rate high enough was equivalent to a further tax cut. That kind of logic smells so Republican. In the same way letting a tax cut expire is a tax increase. According to you, no President will have raised taxes until the top rate is over the 91% paid in the 1950s?
The ONLY tax the poor might not pay is federal income tax. But they pay everything else - in a much greater percentage of their wages than the rich.
The actual SS and medicare tax for many or most poor poeple is 12.4 and 2.9 percent - becasue increasingly low-wage workers are illegally classified as "independent contractors" or "1099 Employees" the latter phrase being a legal contradicton and an open admission of illegality which shows the impunity that employers rob employees of statuatory rights and benefits.
Then wage earners (in my state) pay:
1. A 1 to 3 percent "earned income tax") applicable to paychecks but no other income.
2. A 3.07 percent flat state income tax - starting with the first peny of income with no deductions or breaks unless you are absolutely destitute.
3. A 7 percent sales tax - which thankfully is exempt for food, clothing and medicine porchases.
4. Real estate taxes on their over-assessed dilapidated house - with no low income breaks, and jsut a tiny "homestead exemption". An unemployed elderly man tried to rob a bank to get money to pay his RE tax in my town a few days ago.
5. Increasingly high pubic transit fares for increasingly poor service, or even worse - the userous jitney drivers.
6. Userous check cashing/loan shark shops. Banks don't like poor poeple.
But the worst states are the ones who brag about having no income tax at all. For example, in Washington, the bottom 20% pay an average of 17.3 percent of their income in taxes, the top 1% pay 2.6%. In Texas the bottom 20% pay 12.2%, the top 1% 3.0 percent.
http://www.itepnet.org/whopays.htm
And worse, our "commonwealth" is going broke, while the onlt tax increase that ever seems to be considered is the highly regressive sales tax. A graduated income tax, which could fix the budget shortfall overnight, like the other "commowealths" have, including the two rather right wing southern ones, is prohibited by constitutional amendment.
Pennsylvania is also the only state with _no_ tax on oil and gas extraction. Even a small severance tax on the enormous Marcellus shale gas resources, would wipe out the budget shortfall, allow a restoration and improvement of public transit, cut taxes and provide benefits to the poor, and fix Pennsylvania's near-third-world highway system.
I'd like to see a study on the Actual Effective Tax Rate that includes ALL taxes paid by someone in the $24,000 range.
That would include a % of their rent that goes to property taxes, sales tax, gas tax, income tax, FICA tax etc etc etc
I think we'd find that even at ZERO Income Tax the bottom income people still pay a Far Higher Effective tax rate than the wealthy do.
And a question for the rightwingnuts: if Social Security is a ponzi scheme and should be ended what happens to the monies already paid in that people won't get - shouldn't that be considered a Huge TAX INCREASE on the lower tier earners AND the largest Theft of Taxpayers money ever?
Or is it Theft Only when the rich have to pay it?
Lets admit it - an economic system that delivers ALL the Gains from Growth to one very very small segment of society is by definition Corrupt.
For 30 years Our economic system has delivered all the gains to the wealthy - so it'd be only fair if we set up the tax code so that for the next 30 years All the GAINS from growth go to the bottom 98%..........
Can you imagine the whining, moaning and crying the wealthy would engage in - Then we'd really find out how pathetic, lame and weak the wealthy really are.
The wealthy in this country are Freeloaders and a Drain on growth NOT Job Creators.
If we were smart or just lucky we'd tax the shit out of them to the point where they would simply LEAVE!
I wish "we" had the authority to tax the excrement out of them, but taxes are passed by legislators who are politicians who get in there because they're tapped into big donors who pay for their campaigns and who are also the very people that this talks about.
Even though they're temporarily winning, they are still "moaning and crying." It's something in right wingding psychology that needs to see themselves as a victim. otherwise they'd have to face up to what they really are: "pathetic, lame and weak" , , , and crooked and deluded. The howls of "class warfare" coming from that faction are exposing them to an admittedly resistant public. But up till now it was always part of the U.S. myth that we were a "classless society," that anybody with pluck and determination could join the wealthy. Now by complaining of "class warfare" they are admitting that they are indeed a class, and a class apart at that. As the economic situation worsens, the non beltway public could well begin to say, "Hmm; those guys are . . . " what they are and are ripping us off . . . royally.
---"I'd like to see a study on the Actual Effective Tax Rate that includes ALL taxes paid by someone in the $24,000 range."---
There IS such state-by-state study regularly done - I already cited them in my earlier post. To repeat, go here!
http://www.itepnet.org/whopays.htm
An please support ITEP and their activist arm the Center for tax Justice.
Great - thanks!
Go to the states that brag about not having an income tax first and prepare to have you worst suspicions confirmed.
Even in the most progressive states, the effective rate is at best, flat.
Edit: Are you from Montana? Lucky you - the local taxes are only sligtly regressive - and low. MT probably has a generous severance tax on its extraced copper, gold, coal, oil and gas.
Good data, well presented. Thanks.
Most jobs in america are in firms with less than 25 employees............ If you go up to 50 employees I believe it's around 75% of all new jobs............
So 'factories' with thousands working in them are few to none..............
cabinets, art, and thousands of other products are created in little (under 20 people) 'factories' every single day right hre in America.
But your 'poor people' do create most jobs in America.
Look up the movie "America: Freedom to Fascism" by Aaron Russo.(http://video.google.com/videoplay?docid=-1656880303867390173) Regardless of what you think of the major points being made, there is a fascinating list of the taxes that we pay. When you start to look at them all together and then hear this wealthy squeal that the poor aren't paying their share, it's an eye-opener.
mortgage interest deduction
they are going after the mortgage interest deduction
this is absolutely an increase tax on the middle class
and they want to do this instead of taxing the rich
"It was considered quintessentially American for the wealthy to shoulder a larger share of the load". Benjamin Franklin, one of my personal favorites, makes that point in his autobiography. So it is not a new idea, just a good one.
Shut down the IRS. End ALL income tax. Tax profit not wages. Tax consumption not production. The results of taxing income on the economy is like driving your car with the brakes on. Tax capitol gains at 50% income 0%. The financiers produce nothing yet skim all the cream off the top. They should be taxed and regulated.
I got news for you; it's not just Perry who believes Social Security is a "Ponzi scheme." I'm hearing average, everyday Americans (poor and "middle class") spouting the same lies-- because they're hearing it from Perry and rightwing media sources. This is the same program that kept their grandparents and great-grandparents from being homeless, but now it's a Ponzi scheme.
Let me
Let me make two points; The bottom 3/5 pay little in federal income tax, maybe 4% of all such revenues. The Republicans are right, as far as that goes. But, the reason is that these folks are the very ones whose real wages have fallen by 1/3 since 1980. NAFTA and foreign competition diluted the pricing power of their labor, all such results stemming from a bipartisan consensus about how the US would conduct its trade policies in the emerging era of neo-liberal economics. Point Two is that the Republicans are right when they say the top 20% pay about 2/3 of the federal income taxes collected. But what would one expect when the upper quintile is the only economc segment whose earnings have grown in inflation adjusted terms over the last 30 years? That their percentage of contribution has increased as their tax rates have fallen only attests to the failure of the economy to grow opportunites for the other 4/5, who would gladly pay more taxes if the economy hadn't transformed from one that produced real things to one based on finance and moving money around the globe. The new economy is not so labor intensive, as far fewer people are required to achieve the same dollar output (GDP) in a finance -based economy, as would be needed in an industry-based economy. Yet, 40% of all US business profits now derive from the financial sector.You can imagine each quintile of the economy as one of five poker players, with the top player having an increasing supply of chips, the second one a constant supply, and the last three a steadily diminshing supply. With the last 4 having little to throw into the pot, the top player can just toss in a few of his own and still maintain a supply of chips that is huge relative to what the other players have. Because the other four are strapped for chips, the top man complains that he's the only one keeping up the pot; yet, he is maintaining a growing supply of chips, more than he's ever had. The stream of our tax revenues follows the same principle, with the inability of so many to contribute helping to create an appearance that a wealthy few are somehow suffocating under burdensome taxation. The top quintile's tax contributions may appear disproportionate, but are, in fact, less onerous than ever, sadly illustrating how huge a problem income inequality has become in the USA.
It is all for nought folks, move to the country, learn a trade, live on less, learn to milk a cow, plant, grow and harvest/store food,
Buy a gun, learn how to use it! In 5-10 more years that will be the path to survival! Get a solar panel for your electrical needs, heat with wood. Cut way back now. That large house in the suburbs will be worthless soon, the small farm in the country will be priceless! Do it now before the collaspe!
The trillions have been spent on war, breaks for the rich, the system will fail, and those that continue to think that the government will be there to help/protect them are only fooling themselves.
The nastiest part of this lie is the assumption that the working poor
should HAVE to pay taxes. Why should the state squeeze money out of
people who can barely get by? Society should give them more help, not
tax them.