Wednesday, September 19, 2012

THAT ROMNEY VIDEO #2

Isn’t it amazing that the person responsible for Mother Jones receiving a videotape happened to be James Carter IV the grandson of former president Jimmy Carter. I would assume that he is not a strong Republican.

But let’s examine Romney’s statement about taxes, which I will quote: “There are 47 percent of the people who will vote for the president no matter what. All right, there are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it. That's an entitlement. And the government should give it to them. And they will vote for this president no matter what…These are people who pay no income tax.”

Romney’s right about the non-income-taxed slice of Americans. It’s an issue that conservatives as a whole have been talking about for some time. About 46 percent of US households owed no income tax in 2011, according to an estimate from the Urban Institute-Brookings Tax Policy Center. In 2007, the figure was 40 percent; in 2008 and 2009 that figure was even higher, at 51 percent. (most of the data in this post has been culled from various articles on the Internet)

Romney’s figures require explanation; in 2011 about 49% of the population paid no income tax. However it is wrong to say that all are dependent on the government i.

Half of them don’t owe income tax for the simple reason that they don’t make enough money. As an example a couple with two children with income of $26,400 had no income tax liability in 2011, due to an $11,600 standard deduction and four exemptions of $3,700 each or total $26,400. It is to be noted that the poverty level 2011 was pegged at $23,020 for a family of that size. Thus that illustrated family of 4 was just slightly above the poverty level.

The other half of the untaxed (that’s equal to about 23 percent of total US households) owe their status to tax breaks.

We divided tax expenditures (special provisions in the tax code that benefit particular taxpayers or activities) into eight categories and asked which ones made the most people nontaxable. The conclusion: Three-fourths of those households pay no income tax because of provisions that benefit senior citizens and low-income working families with children. Those provisions include the exclusion of some Social Security benefits from taxable income, the tax credit and extra standard deduction for the elderly, and the child, earned income, and childcare tax credits that primarily help low-income workers with children (see graph). Extending the example offered above, the couple could earn an additional $19,375 without paying income tax because their pre-credit tax liability of $2,056 would be wiped out by a $2,000 child tax credit and $57 of EITC.

Those provisions matter most for households with income under $50,000, who make up nearly 90 percent of those made nontaxable by tax expenditures. Higher-income households pay no tax because of other provisions. Itemized deductions and credits for children and education are a bigger factor for households with income between $50,000 and $100,000. The relatively few nontaxable households with income over $100,000 benefit most from above-the-line and itemized deductions and reduced tax rates on capital gains and dividends.

Not all of those escaping income taxes have modest incomes, however. In 2009, according to Internal Revenue Service studies, 19,551 U.S. households with income above $200,000 owed no U.S. or foreign income tax. About 1 percent of the top 1 percent of income earners, those making about $533,000 or more, did not pay income taxes. That's roughly 13,000 filers .including according to a Tax Policy Center analysis 4,000 millionaires. Six of the 400 U.S. tax filers with the highest adjusted gross income (meaning AGI of at least $77 million) paid no U.S. income tax, (Forbs)

3 comments:

  1. Doc, as an old person living on Social Security and Medicare, I guess I'm one of those getting those government "handouts." One of the many things Romney forgot is that we seniors have paid into Social Security and Medicare all our working lives. We've earned the right to a secure retirement and we paid for it. But I guess we're still in that 47%--or, more correctly, in the 99% of Americans who are not gazillionaires and who (unlike many of them) actually pay our taxes.

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