Let’s explore the misconceptions and realities about who pays taxes.
Republicans love to paint the rich as the minority-victims who pay most of the taxes in this country. Mitt Romney’s recent video gaffe is a perfect example of this view. They will say things like, “86% of all income taxes are paid by the top 25% of income earners” (source). Or in the case of Romney, he claims that 47% of the country does not pay taxes and mooches off the system; these people are therefore entitled and will not take responsibility for their lives. These claims are wildly inaccurate. Their point is to paint the rich as victims and force more of the tax burden on the poor and middle class. They have despised our progressive tax system for decades, favoring a flat tax that would dramatically harm the poor and middle-class to the benefit of the wealthy (go learn about “regressive taxes“).
The Center on Budget and Policy Priorities provides some important insights on this topic.
“The notion that ‘half of Americans don’t pay taxes’ not only overstates the share of households that do not pay federal income taxes in a typical year. It also ignores the other taxes people pay, including federal payroll taxes and state and local taxes. Policymakers, pundits, and others sometimes overlook this point.” Source: bit.ly/iWtaO0
“The reality is that the income tax is one of a number of types of taxes that individuals pay, both over the course of their lifetimes and in a given year, and it makes little sense to treat it as though it were the only tax that matters. Some 82 percent of working households pay more in payroll taxes than in federal income taxes. In fact, low- and moderate-income people pay a much larger share of their incomes in federal payroll taxes than high-income people do: taxpayers in the bottom 20 percent of the income scale paid an average of 8.8 percent of their incomes in payroll taxes in 2007, compared to 1.6 percent of income for those in the top 1 percent of the income distribution.” Source: bit.ly/iWtaO0
“The liberal Citizens for Tax Justice says the highest overall tax rate (this includes federal, state, and local taxes) is 32.2 percent. The top 1 percent pay even less—30.9 percent. They include employer-paid FICA taxes as income, which seems wrong to me. But the conservative Tax Foundation reports that the top 0.1 percent pay an effective federal tax rate of 21.5 percent. The last total tax rate I see from them is 2004, when it reported that the top quintile of earners paid an average total tax rate of 34.5 percent. They don’t break out the top 1 percent, but their rate would actually be lower than that of the top 20 percent as a whole.” (Source)