"Don't Pay Taxes"

[fabrisse]

I think of myself as reasonably intelligent. I understand numbers better now that I'm older (and started paying attention to statistics), and I grew up thinking about and discussing politics.

So when I say I'm confused by the pie chart in this article, it is not an easy admission to make.

What does it mean that those of us who pay payroll tax do not pay federal income tax? This is not me trying to make a political point; it's genuine confusion. Because I thought the money the government took from me, which helps pay for a lot of things I like and some things I don't, was income tax. My W-2 form says what percentage of it is Federal, what percentage is state, and what percentage, if any, is local. Are there people who pay FICA, but don't have Federal tax removed?

Comments

[eanja]

I think I can explain this. Payroll taxes are social security, medicare, etc, that you pay as a flat rate on your income. Anyone who has any income at all has to pay them (except for income above the SS cap, which don't get me started on). Income tax, on the other hand, is based on your income after a whole bunch of deductions and exemptions, which is why you have to file at the end of the year to figure out if you owe extra or get some back. Yes, most of us see both payroll taxes and income taxes taken out on our W-2, but that doesn't mean they are the same thing.

Because payroll taxes are fixed, but income tax is adjustable, at the very height of the recession, there were 47% of the country who did not pay federal income tax because their allowable deductions and personal exemptions came to more than their income, but there were only 18% of people who didn't pay payroll taxes. Consider the example in the article: “a couple with two children earning less than $26,400. They get an $11,600 standard deduction and four exemptions of $3,700, and that takes their liability to zero.” When they fill out their taxes a the end of the year, after taking off all the deductions, their adjusted income is 0, so they own no federal income tax (and will get anything that was taken out during the year refunded). But they still pay medicare and social security on the whole $26,400. The 18% or so who don't pay any federal taxes at all are about 10% retirees, with the rest are mostly students pr disabled- basically people who really aren't earning any income at all.

This differentiation between different kinds of taxes paid to the government, is, of course, a really good way to paint half the country as free-loaders when it actually means nothing of the sort. It's kind of deliberately misleading, hence always being trotted out by people who think the poor have it easy and the rich are overtaxed. Lower down in the article is a bar graph showing that overall, the chunk of income versus tax that people at different levels pay is pretty darn close to even.

Does that help at all?

[fabrisse.livejournal.com]

Immensely. Thank you so much.

Of course my father is one of those "moochers." Thanks to three tours in Vietnam where his exposure to Agent Orange led to his being part of two different cancer clusters, he's on 100% disability for his military retirement income and gets free health care for himself and mom. Personally, I think he's paid for it.

Politics is bad for my blood pressure.

[eanja]

It's all dog-whistling. The trick of course, is that no one thinks of themselves as a moocher,and a remarkable number of people don't even seem to understand that their government money is government money to begin with, but they are completely willing to believe that there are vast quantities of undeserving poor who are just sitting on their butts getting government handouts and should be punished. It's just Reagan's welfare queens repackaged.

I'm not really sure what the big deal is about this tape, since as far as I can tell most republicans really do think like this anyway, as evidenced by the party saying Romney is on-target with these comments.

[malnpudl.livejournal.com]

That was beautifully done. *applause*

[eanja]

Thank you. :-)