Mitt Romney is actually correct according to theTax Policy Center. Almost 47% of Americans don’t pay any federal income taxes. But.......
When you combine who pays both federal income tax andpayroll taxes this number drops off signiﬁcantly and only less then 20% of Americans don’t pay any taxes then.
How do Payroll taxes work and how might they beneﬁt the rich more then anyone else? -Payroll taxes (6.2% of an employees income) are only applied to the ﬁrst 110,000$ worth of income so a person making one million dollars annually is only getting taxed on 11% of his income. (The remaining 89% of income is essentially tax break as the millionaire no longer has to pay into the payroll tax) -Meanwhile a married couple with a combined salary of 90,000$ is still subject to paying all of thier income into the payroll tax. -Payroll taxes are shown to be regressive by nature as they fund social security yet someone at that bottom 50% of income that is lower middle class or the working poor have much shorter life spans compared to wealthier individuals and don’t live long after 65 years of age. -A wealthy individual has potential to live much longer and therefore collects social security beneﬁts for a longer period of time.
What about the rest of the population that does not pay federalincome tax then? 18% are still not paying it looks like, are they all poor moochers like they way Romney described? -Many of them are either very young and in college or elderly and retired. -Age plays an important role as you make the most (and pay the most in taxes) between the ages of 25 to 60.
What exactly do we count as a tax credit and deduction? The remainder of why some Americans don’t pay federal income taxes is also a combination popular deductions and credits written in our tax code that help parents, students, and the elderly. (Most but not all seniors are exempt from paying taxes on their social security beneﬁts).
When taking into account federal, payroll, andlocal taxes what does our tax code look like then? -If you average an Americans total income to total taxes paid including payroll and local our tax code is essentially ﬂat.
-Whatever yourshare of income totals, is what you will pay in taxes. (This is very much similar toprevious graph)
For additional info or questions feel free to post in the comments section. I made this blog to learn most of all so even if you disagree with me feel free to challenge me as Ialways appreciate the input and try my best to keep an open mind. www.econsoldier.com Blake Altemara