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Right-Wing "47% Pay No Taxes" Talking Point Debunked

April 14, 2010

In anticipation of the April 15 Tax Day, Republicans have resurrected their tried and untrue talking point dating back to the 2008 McCain campaign that over 40% of Americans pay no taxes. Of course, virtually all workers pay the Social Security and Medicare payroll taxes. And the new tax credits signed into law by presidents Bush and Obama, on top of the Earned Income Tax Credit (EITC) Ronald Reagan himself proclaimed, "the best anti-poverty, the best pro-family, the best job creation measure to come out of Congress," explain how the tax burden is lightened for many working families.
Yet despite record income inequality, stagnant wages and the inescapable conclusion that tax rates for the wealthy "have fallen more than any other group's over the last three decades," the Republican echo chamber has resurrected its claim that tax credits for working Americans constitute "welfare."
Now, media as diverse as the Daily Show and the New York Times are pushing back against the latest attack in the Republicans' perpetual class war.
In a segment Tuesday titled, "That's Tariffic," Jon Stewart lamented:

"The media attacks the poor and elderly for not paying federal income taxes, but the U.S. government doesn't see a cent of Exxon's $35 billion profit."

And in Tuesday's New York Times, David Leonhardt urged Americans to "look closer":

With Tax Day coming on Thursday, 47 percent has become shorthand for the notion that the wealthy face a much higher tax burden than they once did while growing numbers of Americans are effectively on the dole.

Neither one of those ideas is true. They rely on a cleverly selective reading of the facts. So does the 47 percent number.

Labeling the 47% argument a "distraction" from "who really pays what in taxes," Leonhardt explained:

Even if the discussion is restricted to federal taxes (for which the statistics are better), a vast majority of households end up paying federal taxes. Congressional Budget Office data suggests that, at most, about 10 percent of all households pay no net federal taxes. The number 10 is obviously a lot smaller than 47.

The reason is that poor families generally pay more in payroll taxes than they receive through benefits like the Earned Income Tax Credit. It's not just poor families for whom the payroll tax is a big deal, either. About three-quarters of all American households pay more in payroll taxes, which go toward Medicare and Social Security, than in income taxes.

Leonhardt's analysis doesn't end there. Corporate taxes have plummeted. "State and local taxes, meanwhile, may actually be regressive" as "the typical family pays a lot of state and local taxes, too -- almost half as much as in federal taxes." And while the income gap between the rich and everyone else hit levels not seen since 1929, he concludes:

If anything, the government numbers I'm using here exaggerate how much of the tax burden falls on the wealthy. These numbers fail to account for the income that is hidden from tax collectors -- a practice, research shows, that is more common among affluent families. "Because higher-income people are understating their income," Joel Slemrod, a tax scholar at the University of Michigan, says, "We've been overstating their average tax rates."

(For more background, see "10 Republican Lies for Tax Day" and "Conservatives Resume Cry of Income Tax Welfare.")
(This piece also appears at Crooks and Liars.)

2 comments on “Right-Wing "47% Pay No Taxes" Talking Point Debunked”

  1. There wasn't really much to this article besides telling us that The rich aren't paying enough.
    I'm sure there are states where the bottom 47% have to pay an income tax, but this is a Conservative talking point about reforming the Federal tax system. Every state should handle their own income tax problem themselves.
    And sorry, but I don't quite follow what you're saying about the payroll tax. Are you saying that 37 of the bottom 47% pay into Medicare and Social Security, but don't pay any other Income tax? That's a legit argument, but I hope you're not one of the people that try to say that most Federal Taxes go to the military because you exclude SS and Medicare as "trust funds" that are not part of the income tax. You can't have it both ways.


Jon Perr
Jon Perr is a technology marketing consultant and product strategist who writes about American politics and public policy.

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