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The sophistry of lefty rhetoric on taxes

I\'d be happy if I weren\'t paying taxes too

Todd Beeton at MyDD argues that the right is out of touch on taxes and quotes Gallup. It turns out that his argument is mere sophistry. Gallup says:

A new Gallup Poll finds 48% of Americans saying the amount of federal income taxes they pay is “about right,” with 46% saying “too high” — one of the most positive assessments Gallup has measured since 1956. Typically, a majority of Americans say their taxes are too high, and relatively few say their taxes are too low.

Compare these with who actually pays taxes who actually pays taxes, which Ari Fleischer reminds us of. Gallup says that 48% say that they are paying “about right”. But 40% don’t actually pay income taxes:

When you make almost 26% of the income and you pay only 0.6% of the income tax, that’s a good deal, courtesy of those who do pay income taxes. For the bottom 40%, the redistribution deal is even better. In 2001, these 43 million Americans, who earn less than $30,500, made 13.5% of the nation’s income but paid no income tax. Instead, they received checks from their taxpaying neighbors worth $16.3 billion. By 2005, those checks totaled $33.3 billion.

If I didn’t pay tax, I would probably argue that I am doing “about right” too. The 8% that does pay taxes and says that they are “about right” is what Beeton is really arguing about that. That’s not a really compelling argument. And then, according to Gallup, there are 3% who think that they are paying too little.

So 11% of the population both pays taxes and thinks that they are paying “about right” or “too little”. And 46% think that they are paying “too much”. So about 1 in 5 tax payers are happy with what they are paying, while 4 in 5 income tax payers think they are paying too much.

In fact, Gallup’s numbers support Fleischer’s argument, not Beeton’s. As Fleischer notes, George W. Bush took people off the tax rolls:

According to the CBO, those who made less than $44,300 in 2001 — 60% of the country — paid a paltry 3.3% of all income taxes. By 2005, almost all of them were excused from paying any income tax. They paid less than 1% of the income tax burden. Their share shrank even when taking into account the payroll tax. In 2001, the bottom 60% paid 16.3% of all taxes; by 2005 their share was down to 14.3%. All the while, this large group of voters made 25.8% of the nation’s income.

Of course the numbers of “about right” are at an all-time high. The number of people not paying income taxes are at an all-time high.

COMMENTS

  • Fermi

    I think we can all agree that a lot of our tax dollars go to waste, but I don’t see how the claim that those making less than $30,000 don’t pay any income taxes.

    I am student how also works full-time and makes around $24,000 a year. According to the WSJ I should be paying no taxes, but somehow I ended up paying 18% in taxes last year. What gives? Am I missing something?

    Now I have not yet reached my full earning potential, but I still think that I am paying my share.

    How about the rest of you? Do you make less than $30000/yr and pay no taxes? And apparently according to CBO, if you make less than $44,300/yr, you were likely “excused from paying any income tax.”

    It seems like blaming 60% of the country for not pulling there weight, isn’t a productive argument. We need to be focusing on the criminally wasteful government spending deficits and government funding of failed businesses.

    • DONTREADONME

      Total income $24,000, did you subtract your deductions of $5350.00 and $3400.00 which leaves you with a taxable income of $15,250. The federal income tax you owed was $1883.00. That is a marginal tax rate of 7%! Wow man, if you paid more than that on your federal income tax, get a new accountant. I paid 28% marginal tax rate and I have a mortgage and used the itemized deduction. Poor you, wait to you work for a living.

      You seem to be including your FICA and your Medicare tax in with your income tax rate there. My advice, stop using Turbo Tax.

      • Tbone

        Gee, even Biden gave a way a couple of old shirts.

        • DONTREADONME

          so much for those donations to American Vets, Homeless American Veterans and Salvation Army charities. Nah, my heart tells me I still will donate to them.

      • DONTREADONME

        I must rephrase my previous comment… Wait to you work for as a professional making or self employed at $50k a year. Do not forget you have to pay 15% to Social Security, they call that little bugger the self employment tax. Yeah, I was a consultant and I got hit with that one.

        • Fermi

          I was including the 15% to social security and FICA. I suppose this is not technically income tax so that must be the discrepancy. I just remember adding going over my W2s and after calculating by refund this year and getting around in Federal taxes paid.

          By the way, I did make around $1000 in charitable donations last year. I wish I could do more, but at this early stage that is all I could afford.

          • DONTREADONME

            it seems like everyone talks about these so called people that do not pay any taxes, but they are mainly those that can utilize the itemized deductions. I am with you when I was making what you did in college, I was saying good golly why do I have to pay? Anyway, when you get your degree and if it is in the field that Fermi identifies as than you will definitly be up in the 28% to 33% marginal tax rate. Of course to get to that 33%, congratulations, you are rich eventhough it will not feel like you are. Heh, that extra 7% they make you pay as the so called employment tax, I think that needs to go away so that people like yourself self employed have a little more capital to invest for yourself. For me last year was worse for my taxes because I took the old standard deduction, I was renting and I paid the full brunt including my consultation business which required me to pay quarterly, and I had to pay more because I underpaid over the year. So last year I owed the government a months worth of salary. Yikes.

          • red4ever

            You only made $24,000 last year, yet made $1,000 in charitable contributions?
            That is a lot more than people who make more than you give. Thank you for caring enough to find a way to give.

    • DONTREADONME

      if you are using the standard deduction as I did for many years when I was your age, you will end up paying some sort of income tax, especially if you have no income adjustments at $24,000 a year. Remember, it is more than likely that the people who make over $40k a year have a house, family, and other expenses that go into the itemized deductions that may end up leaving them with a marginal tax rate of <7%. People making less than $15.00 dollars an hour (in the NOVA, DC and Montgomery County MD) are not exactly paying any tax if they own a home, let alone being able to pay for a vehicle. Oh, and do not inlclude your state tax along with the federal, that boosts it up everytime, especially if you are using standard deductions. You used the name Fermi, come on man, Enrico Fermi would be disappointed in you.

    • Raven

      Minus your FICA taxes, you got it all back.

      So did my wife and I (or so nearly as to make really no difference) and we made a combined 45k…

      As for my tax bills: “Thank you, President Bush and you’re increase of the Married, Filing Jointly Deduction!”

      • Raven

        And make less than 50k, getting enough deductions to make it worth Itemizing them is a real pain. I have checked my itemized deductions every year for the last 5 and still fall over 3k short of beating the Standardized deduction.

        • Raven

          …Yes, before you ask, I do own a home and my wife has Studnet Loans to pay and we donate to charity…
          If any of you who Do itemize in our income bracket and aren’t self-employed, please, let me in on your secret…

    • mom2oneson

      if they are single have 1 kid they can get the EITC (which is refundable) earning under $34,00 and if 2 kids the ETIC under $39,000
      They will also get the CTC and the ACTC (refundable too)
      those are big chunks of change ;)

      I’m not sure about this so don’t take my word! :)

    • conservativecounsel

      No, there is no way you payed 18% on that income. Did you use calculations supplied by the current administration?

      More importantly, people that have had enough are not blaming the 60% for not pulling their weight, we are blaming the 60% that pay little for being to eager to reach into the pockets of those that pay much more.

      And we are focusing on the government waste, especially since we are paying for it.

      • Brian Hibbert

        I assume Fermi is being claimed on his or her parent’s taxes and is unable to take a personal deduction. I presume Fermi to also be unmarried so in addition to not getting to claim himself is also not taking a myriad of other deductions.

        If you add in the payroll taxes, you get another 15.3% (Fermi was probably only thinking of the 7.65% taken directly from his check).

        If you add in state income taxes, again depending upon the state, you get another 0 to 10% of your income going to feed the beast.

        If you add in sales taxes you can figure another 5% to 8% in most states (doesn’t apply to you lucky few in non sales tax states).

        Since he’s a student, I also assume he’s not paying any real estate taxes.

        18% is probably an under estimate of the taxes Fermi is actually paying and may be grossly underestimated.

        Hey Fermi, just wait until you DO reach your full earning potential! Then you’ll be pulling more than your fair share!

        • Brian Hibbert

          He did use the 15% payroll tax rate.

  • http://fairfaxgardener.blogspot.com ddstrain

    I am aghast and sickened at the amount of our hard earned money is being taken from my famiily. As best I can tell, there is no longer any incentive to work as hard as we do. Why work just to have it seized and given to someone else? Just a pathetic state of affairs.

    Anyone else going to be at the DC tea party? What about the Merrifield VA rally? I’ll be at both (hopefully)

    • DONTREADONME

      but work and all for the USMC may give me good reason to not attend. My wife is going to it none-the-less.

  • DavidSage

    In many ways, Republicans have given too many income tax cuts to the middle and lower classes, and have painted ourselves in a corner. It’s almost become a new entitlement that’s going to be tough to take away from people. When people don’t pay any taxes, they suddenly become very “pro” big government. They’re also generally supportive of tax increases since they don’t think they’ll be affected.

    It’s very unhealthy for a society to basically just have the top 10% of earners “carry” everyone. An Atlas Shrugged scenario is very likely, with people instead moving their resources and businesses offshore. It’s already happening now with many large corporations.

    Politically, it’s very easy to carve out a small minority of people, and tax them to oblivion. Look at what Liberals have done with cigarettes. Because a majority of people don’t smoke, there is very little consequence to raising taxes on them to an absolutely absurd level.

    I would like to see either a simplified flat tax (around 20% rate), where EVERYONE pays the same rate, whether it’s one dollar a year or 1 billion. I would prefer the “fair tax” where it would be a national sales tax, but I think it would be politically impossible to pass.

    • Fermi

      I think there may be more support for a flat tax than you think. People at both ends are getting tired of a corrupt and unfair system. Folks at the low end of the earning spectrum like to hate on the rich and their accountants for finding creative ways to duck their taxes (i.e. off-shore assets). Small business owners are sick of getting punished for their hard work and ingenuity.

      I remember seeing a poll (I will try to find and post a link) asking Americans what an appropriate tax rate for their own household should be. Almost all responded around 20%.

      The time for a flat tax might finally be coming. If we can galvanize public support around the current outrage over the bailout and enormous spending deficits, this could be a great platform for 2010.

      • DONTREADONME

        I agree a flat tax may be a good idea. Why not? I know we as a country have become used to the progressive tax system, but the FICA tax is a flat tax up to a certain point in income. I do not hear anyone complaining about SS; however, they do complain the systems unsustainable structure. I would be all for lowering the FICA to 10% with no income ceiling. That is 5% paid by the employer and the other 5% paid by the employee. When it comes to self employment then we need to look at the person as a business; however that individual is no longer responsible for 15% but rather it is reduced to 10%. I think we may increase money to the SS system ASAP with this. Plus it allows for the individual to determine if the additional 5% of income can be invested in private backed securities at their own risk. What do think. I know it is a complicated subject, but I wanted to add a quick thought there.

        • Raven

          SS is unsustainable and should be done away with entirely before it does away with our economy.

          And the rest of the stuff FICA pays for is a series of programs that the government never should have begun and that have proven to be abject failures. Time to cut them, too. Past time.

      • MattW

        I have friends all over the political spectrum, and one thing there’s a lot of agreement on is that our tax system sucks. Overly complicated and way too many loopholes.

        I’m no expert, but the FairTax system Huckabee was talking about seemed a lot better than the morass we’re stuck with now.

        There are too many billions being wasted on tax compliance, when the vast majority of taxpayers are honest and just having a hard time figuring out a system politicians have polluted the hell out of.

        Hopefully everyone is ready for the barrage of broken-window arguments from the tax prep industry about how tax reform will result in the loss of thousands of jobs. Blah.

    • Raven

      The Flat Tax, though. That has some real promise. But there’s no need for 20%. It would definitely work at under 10% and even lower if we can cut back on government a bit.

    • mom2oneson

      Why is there republican support for refundable tax credits like the ETIC and ACTC?
      I think we should be makingan argument against people recieving over 50% of what their annual earning back in a “credit” when they have paid 0 federal income tax before arguing against the % being paid. I don’t understand at all how republicans have supported these credits.

      • DONTREADONME

        you get these credits at the end of the year, is because of the interest made on the withholdings from your paycheck over the year. I do not know if this is what they do, but I can imagine this is why, since they get a kick out of charging you penalties for not properly paying the correct amount of tax quarterly. That is when you are self employed you pay estimated taxes for the quarter, if you underpay the estimated tax in the quarter but at the end of the year you paid to much, they will still exact a pound of flesh that cuts into receiving your earnings back. So ulimately, you will receive less now back from the feds than you would have if you properly paid your taxes quarterly. BTW this is exactly what your employer has to do every quarter. Does that correlate the issue of credits versus just cutting your withholdings. Man if I could do this with peoples money, I would invest the amount they paid at 4% and then give them a refund back at the end of the year. I made 4% on your withholdings, including the extra amount that is refunded to you at the end of the year. Good scam huh? I think the Republicans were for it is it does help the person who needs the credit but it also give the Government a source of revenue on the investement of that credit money.

        One problem with what I just wrote is that I am not sure if that is what the Government does with withholdings that are in excess of what you truly owe.

        • mom2oneson

          The IRS does pay interest if there was an error in an old year and either you or they correct in a later year and you are owed a refund.

          What I’m talking more about are the refundable credits, not just income tax that is paid and then refunded. If I had earned $9,000 and had two children and less than approx $3,000 in capital gains, paying 0 federal tax during the year I would have recieved back around $5,000.
          I posted this earlier but I always hear so much anti-welfare talk and how bad welfare welfare welfare is ;) but we have republican support for these refundable tax crediits like the EITC and the Additional Child Tax Credit.

        • mom2oneson

          playing accountant on the internet :)

  • Tbone

    If the Repuiblicans want to regain power they should make the simple statement that if you are, have been or ever expect to be a taxpayer, you should vote for Republicans and only chronic tax consumers should vote for Democrats. This statement should become the core plank of the Republicans.