Where does the 40% pay no tax talking point come from?

[zeos3]

Can someone help me figure out where this RW talking point come from? I hear it a lot and would like to put it to rest.

I just heard it again on the radio that 40-45% of people don't pay income taxes. I find it's helpful to figure out where these points come from and to show their relationship to reality. Is this figure even remotely close to the truth?

[ColbertWatcher]

1. Good question. n/t

[ingac70]

2. It's pretty close to the truth.

40% of us don't make enough wages to pay Federal income tax.

[sandnsea]

5. Most wages have withholding

So the government gets to use the money all year - low income people just get most all of it back, except the interest.

[fed_up_mother]

31. Increase your exemptions so the government doesn't "hold" your money!

[Warpy]

8. Not quite true.

In addition, OASDI is subtracted from our wages and 40% of that is being used in the general fund as income taxes. Yes, there's a lock box full of T-bills, but does anybody think those IOUs will be cashable the state this country's finances are in after two Bushes and a Reagan?

Add to that the taxes the bottom 40% pay in greater percentages than the top 60% from sales taxes to property taxes to licensing and I'm afraid you've got a very different picture of how the tax burden has been shifted onto the backs of those least able to pay.

[zeos3]

12. Right

I know they're not mentioning sales tax, property tax, etc. It just seemed like an awfully high figure to me. Even this many get a refund, the FICA money doesn't come back to them, right?

[Warpy]

17. There are no exemptions to claim on OASDI

and there is no possibility of refund.

This was the cruelest thing Reagan did to working people, to raise these deductions SIX TIMES and use them to cover up the disaster his tax cuts created.

[zeos3]

23. That's a good point

I've used it many times but the Reagan worshipers don't understand.

[ColbertWatcher]

20. That's a key dinstinction- the 40% don't pay INCOME TAX, but they do pay SALES TAXES. n/t

[nc4bo]

34. I worked the night shift part-time for a hotel chain and all of my taxes were refunded

and I resent Mccain's insinuation that working people who don't pay taxes are receiving fed. welfare.

IF I were paid more and received MORE hours to work, I'd earn enough to qualify to pay more taxes.

Fuck you Mccain you facist bastard.

[sandnsea]

3. Low income people get full refunds

So 40% don't pay federal income tax.

But we do pay FICA and they do use that to balance their damn budget, especially when they cut taxes for the wealthy. Then they tell us our FICA is all gone.

[EC]

11. Not really,

I only earned $7,000 something last year, because I lost my job in May - so my earnings plus unemployment made up my gross earnings...after deductions I still had to pay, it was only a little over $300. but I still owed taxes...so that is not true, unless you have a lot of deductions, like kids...

[zeos3]

14. See...

This is what I don't get about that 40% number. It would seem to me that you would qualify to not pay any income tax. Where does this 40% number come from. When I was making $14-$15K about 10 years ago I was still paying some income tax.

[Rancid Crabtree]

24. fwiw

...and you were probably single and you truthfully filled out the form that tells your employer how much to deduct...say, had you listed 'filing single' claimed 10, instead of 1 for yourself, or heavens forbid, zero...you would have had less deducted...try it sometime...it's your money...file single with 10...what is it? deductions? exemptions? whatever the term is...your paycheck would be larger...you may owe in April...or marry, have a bunch of kids, and get more money back, like someone pointed out earlier, later, whatever...none of us get interest back on the money taken from us, but a bunch of folk get money that was never theirs to begin with, the government already pays a big chunk of health care costs...enjoy the day.

[sandnsea]

15. Low income parents?

Would that be more accurate?

[baldguy]

4. Excised from their terminal sphincter,

[mrcheerful]

6. Welfare/poor people pay no income taxes, mainly can't pay what you don't have an

income. But the welfare/poor people pay more in other taxes, only they really don't pay those because they get free money from the government. That damn RW circular thinking.

[EC]

7. I don't know, isn't the zero tax at like< $6,000 a year gross?

I'm guessing that isn't anywhere near 40% of the population...

[zeos3]

16. Yeah...

That number sounds too high. Are the including the TOTAL population? Employed and unemployed?

[bornskeptic]

38. In 2007 a single person with no dependents did not have to pay

income tax if his or her AGI was below $8750. This is the amount of the standard deduction plus the personal exemption. The corresponding figure for a couple filing jointly was $17500. Actually, a single person making $10000 only in wages or salary would not have to pay, because he or she could take advantage of the EIC. For taxpayers with dependent children, the numbers go appreciably higher. Each child provides a $3400 exemption and also a child tax credit of up to $1000. A married couple filing jointly with two children and a combined income of $40000 would typically not pay any income tax. Their taxable income (AGI - standard deduction and 4 exemptions) would be $15700. From the tax tables this gives a tax of $1576, and, since this is less than $2000, it would be wiped out by the child tax credit. Taking into account itemized deductions and other possible credits, many taxpayers with considerably higher incomes do not pay federal income taxes. I don't know if the 40% figure is accurate, but it seems plausible. But of course it is ludicrous to say that people who don't pay income tax don't pay any tax, as they are nailed by al the regressive taxes.

[machI]

9. They are ignoring Sales Tax

And the Sales Tax is the most unfair to the people who earn the least.

[zeos3]

18. Yes I see that

When they specifically say income taxes they exclude sales tax etc. Do you think they include people who make money from capital gains only in this figure also?

[petronius]

10. Many people have low enough incomes and/or enough deductions

to get full refunds of any fed income tax withheld. Given tax credits, getting back more than was withheld is possible (as in the EIC). However, people who pay no income tax still pay a whole host of other taxes, including sales tax...

The 40% number is probably right, at least it sounds reasonable to me, although it could include people who are not working (i.e. 40% of the entire population)...

[zeos3]

19. That's what I mean

It sounds very high to me, maybe they are talking about the entire population regardless of whether or not there was income to be taxed?

[Myrina]

13. ... that would be the millionaires with accountants and loopholes ....

... not those of us who are actually honest and not able to have offshore "investments" ...

[zeos3]

21. I have a feeling they might be

including this group as well. Even after deductions and excluding other taxes this number sounds very high.

[EC]

22. I wonder if they are including those on SS

how many people are on Social Security? They have to be talking about the whole population and those are not the ones that Obama would give tax breaks to, since they don't work...if you don't file a tax return, you can't get a tax break...

[dorkulon]

25. More like 38%, but payroll taxes aren't included.

and payroll taxes make up about as much of Fed revenue as income tax

[KharmaTrain]

26. Similar To The Immigration Strawman

I think the breakpoint is around $19,500 a year...earn below that and pay no taxes. Now that population includes dependents who file seperately (kids with interest income on college bonds), the elderly, and, of course, the poor.

Yes, it doesn't reflect the other taxes these people pay...payroll, retail and some even pay property taxes. The GOOP game is to make it seem like the poor and immigrants "free-load"...that we're doing them a big favor by letting them go to a hospital or send their child to a school...to demonize these people.

But then I know some very wealthy people who have very creative accountants who widdle their taxes down to almost nothing or corporations that off-shore and pay nothing. But, of course, it's easier to target the poor.

[dorkulon]

30. See this thread.

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=4292387&mesg_id=4292387

[KharmaTrain]

33. A Very Good Post...

The offshoring of jobs and profits have been going on for decades...and it points to another issue that's rarely discussed...the corporate welfare state...a lot of money is thrown at those people.

If the markets and business continues to tank, the revenue crunch next year will be real bad...think of all the taxable income that has been lost and those who are taking losses now that will be depreciated for years to come.

Cheers...

[dorkulon]

36. I wish the campaign would push that message harder... they should call it "Wealth-care."

You know, "We're the party of health care, they're the party of wealth care," that sort of thing.

[KharmaTrain]

37. It Just Isn't "Sexy"

You can only message what the corporate media will swallow. A complicated message or one of substance just doesn't "sizzle" like one loaded with rhetoric and theatrics. The GOOP has mastered taking their issues and cutting them up for soundbites and zingers...catered to the medium...such as "democrats will raise your taxes"...or "you're paying too much"...these are very knee-jerk and require little back-up or facts. And once this premise is assumed, then you can pile on who those democrats are or whose paying too much or "taking your money". It's a game the GOOP has used for decades and most Democrats have fallen prey in trying to explain their way out of this framing.

The good thing about the Obama campaign is they have bypassed the media filters through the internet and a strong ground game. The messages there are more detailed and it's helped in preventing many of the typical repugnican memes and strawmen to take hold.

Cheers...

[annabanana]

27. the BIG LIE being perpetrating with this figure is this:

Obama's plan is not going to hand out money to people who pay no taxes. The tax cuts will be for those who actually pay taxes. If your kid gets paid for a paper route and doesn't make the "who has to file" threshold, no tax bread for him. . sorry.

Why the bobbleheads let this pass all the time is worth asking.

[many a good man]

28. Two-thirds pay more Payroll tax than Income tax

From Urban Institute study in 2006:

Edited for link: http://www.urban.org/publications/1001065.html

April 15 is synonymous with taxes in the United States, but most Americans actually pay more payroll taxes than federal income taxes. In 2006 workers and employers each paid 6.2 percent Social Security tax on the first $94,200 of earnings and 1.45 percent Medicare tax on all wages. While the statutory obligation to pay payroll taxes is split evenly between workers and employers, most economists believe that the employer tax usually translates into lower wages, so workers bear the full burden of the tax. Thus, the total payroll tax rate equals 15.3 percent of earnings for most workers.

About two-thirds of taxpayers owed more payroll taxes (including the employer portion) than individual income taxes in 2006. Many households (including most retirees) do not have any wage income and thus pay no payroll tax. Among households with wage earners, 86 percent have higher payroll taxes than income taxes, including almost all of those with incomes less than $40,000 and 94 percent of those with incomes less than $100,000. If only the employee portion of payroll taxes is considered, 44 percent of taxpayers and 56 percent of wage earners pay more payroll tax than income tax, including nearly 80 percent of earners with incomes less than $50,000.

The payroll tax is very regressive with respect to current income: The average tax rate falls as income rises. The income tax, in contrast, is progressive. The regressivity of the payroll tax is mitigated to a substantial extent when Social Security and Medicare benefits are considered as well (not shown).

Thus Republican tax cuts should have lost their appeal to almost everyone earning less than $100K. There just isn't much more there to cut. Meanwhile, the federal government is about 40% underfunded in the long run.

[DeeDeeNY]

29. Is it 40% of people or of working people?

Because 40% of the population in general would include people who don't work -- such as children, the elderly, and the unemployed.

[zeos3]

40. That's what I'm trying to figure out eom

[muriel_volestrangler]

32. Recent article on this:

The actual figure of “taxable units” who don’t pay the standard income tax — a taxable unit being a couple filing jointly or a person filing — is somewhere around 38 percent. Even that number is grossly exaggerated, because it excludes what people pay through the payroll tax.
...
How much does the payroll tax amount to? Well, last year the standard income tax brought in $1.17 trillion, while the payroll tax brought in $873.4 billion.
...
Last year alone, $190 billion in payroll tax receipts was diverted to general fund use, paying for everything from Iraq to the salaries of park rangers.

As of 2007, a total of $2.25 trillion of payroll tax money paid into the Social Security and Medicare trust funds had been diverted to general fund use and replaced with government IOUs. In effect, the trust funds are an illusion. Payroll taxes and income taxes go into the same pool of money and are withdrawn from that same pool of money to fund government.

And for that reason, the claim that 50 percent, or even 38 percent, of Americans pay no income tax is flat out wrong.

http://www.ajc.com/blogs/content/shared-blogs/ajc/bookman/entries/2008/10/07/the_half_of_americans_pay_no_i.html

[zeos3]

39. Thanks for the article eom

[MiniMe]

35. The RW talking point that gets me is that if you want to give them a tax cut

you have to send them a check. Somebody needs to nip that talking point in the bud. Those who are not paying taxes will not be getting a check back. You don't get more than you put in back. If you paid zero before, you will pay zero now. This has to be one of the stupidest talking points ever.