Friday, April 12, 2013

Exploding The Republican 47 Percent Tax Myth: I'm A 47 Percenter, And I Paid Federal Income Taxes In 2012

One of the most pernicious statements of the 2012 election campaign, and a statement which may have helped cost Mitt Romney the presidential election, was a statement attributed to him about the "47 percent of Americans who don't pay taxes". Here's the full quote from the May 2012 fundraiser at which Romney made the statement:

"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. ... My job is not to worry about those people. I'll never convince them they should take personal responsibility and care for their lives."

Progressives manipulated this statement and made it appear as if Romney said that 47 percent of Americans don't pay taxes. Worse yet, neocon shills like Sean Hannity tried to market it as a positive. It's no wonder that many people in the 47 percent category took it as an insult, implying that they're somehow less productive and less worthy simply because they're not rich enough to pay much in the way of Federal income taxes. Many of these people may have been repulsed by Barack Obama, but they could not bring themselves to vote for Mitt Romney because of it. I'm one of the exceptions; I voted for Romney anyway not only because I believe his remark was exaggerated, but because I cannot stomach Barack Obama's political vision.

Update May 27th: I've just learned from a discussion on the F2 Anonboard that the source I cited did not publish the complete statement by Mitt Romney. The Washington Post published the complete statement, and Romney did claim that the 47 percent do not pay taxes. Here's the remainder, along with a video clip:

"These are people who pay no income tax. 47 percent of Americans pay no income tax. So our message of low taxes doesn’t connect… my job is not to worry about those people. I’ll never convince them that they should take personal responsibility and care for their lives".

Nevertheless, the original premise is still correct. I just filed by Form 1040 for 2012, and guess what? I am part of that 47 percent, and I not only paid Federal income taxes, but I do not qualify for a refund. Here's the proof:

-- Total Income (Line 22): $26,017.00. This includes $25,019.00 in military retirement (line 16b), $120 interest from two bank accounts (line 8a), and the $878 Alaska Permanent Fund Dividend (line 21). Because I qualified for no additional credits listed in lines 23-35, my Adjusted Gross Income (line 37) was also $26,017.00. By the way, retirement pay is not an unearned entitlement; it is deferred compensation.

-- Total Federal Income Taxes Withheld: $1,855.65 withheld (line 62), all from retirement pay. Nothing was withheld from the other two sources.

-- Standard Deduction: $5,950.00 (line 40); reduced taxable income to $20.067.00. Not enough qualifying deductions to itemize.

-- Exemptions: $3,800 (line 42); reduced taxable income to a final total of $16,267.00. Entitled to only one exemption, for self; single filing individually.

-- Total Tax Liability: $2,006.00 (line 61); calculated by initializing the $16,267.00 against the Single column on page 81 of the 2012 tax table.

-- Additional Tax Liability: Since only $1,855.65 was withheld, this means I incurred an additional $150.35 tax liability (line 76), for which I sent in a check.

So the notion that 47 percent don't pay taxes is false; I paid $2,006.00 for the 2012 tax year, and I'm getting none of it back. Mind you, I am not complaining about it, but I am rebutting a false notion. The fact that I'm not getting back a refund is not because I'm stupid or didn't use a professional tax service. It's because I didn't qualify for the myriad of additional deductions or exemptions available to others. I cannot expect to claim deductions or exemptions to which I am not entitled.

Progressives have been waging class warfare for years, criminalizing wealth (except their own). But how did conservatives and the Tea Party respond to this? By waging class warfare of their own -- against the poor. They responded by criminalizing poverty. It's no wonder many Americans don't believe either the Democrats or Republicans represent their interests. Many people do indeed end up paying no net taxes, but don't stereotype all low-income people, and don't criminalize their poverty unless it results from chronic criminal behavior.

If my economic contribution is limited because I commit a crime against persons or property and society has to pay for my incarceration, then society has a legitimate beef. But if my economic contribution is limited simply because I was not smart or lucky enough to become rich, that's just too damn bad. It is not a crime not to be rich and pay scads of taxes. And even if I cost society money in the future, society has probably cost me money in the past. Nearly 50 percent of my property taxes go to support a school district whose facilities and services I don't use, but not only do I not complain about it, but I've voted for two-thirds of school bonds on local ballots since 1994. This does not imply that tax reform is not necessary; everyone should have at least a bit of "skin in the game". But the Republican Party cannot effectively compete nationally if it continues to enshrine plutocracy and judge people only by their economic capabilities.

The Republican Party may be able to win without the Blacks, Latinos, or gays, but it cannot win without the 47 percenters. Social conservatives are already threatening to bolt the party because it's wavering on gay marriage; losing all the 47 percenters would finish it off. One party which could benefit would be the American Freedom Party, which effectively rebutted a smear campaign by the Anti-Defamation League HERE.

A September 21st, 2012 Washington Post article entitled "Five myths about the 47 percent" reminds us that most of the 47 percent do pay taxes in other forms:

The most pernicious misconception about people who don’t pay federal income taxes is that they don’t pay any taxes. That oft-heard claim ignores all the other taxes Americans encounter in their daily lives. Almost two-thirds of the 47 percent work, for example, and their payroll taxes help finance Social Security and Medicare. Accounting for this, the share of households paying no net federal taxes falls to 28 percent.

And those aren’t the only other taxes they bear. According to economic research, the corporate income tax discourages domestic investment; that depresses wages, so workers are effectively paying some of the corporate tax. More directly, many households pay federal taxes on gasoline, beer and cigarettes. And then there are state and local sales, property and income taxes — all of which are often less progressive than the federal income tax. Putting all these together, a family of three with an income of $30,000 would owe no federal income tax (in fact, they would get money back). But they could easily pay more than $4,500, or 15 percent of their income, in taxes.

Class warfare won't solve this problem. Tax reform, which spreads the burden as widely and fairly as possible, will work. And yes, taxation must be mildly progressive; a CEO who earns $10 million per year is capable of paying a higher rate than someone earning $26,017.00 per year.

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