When headlines scream "Nearly half of Americans pay no taxes," pundits smell blood in the water. Stories on a recent report from the Tax Policy Center finding that 47 percent of Americans owe no federal income tax said exactly that, leading to a spate of blogs and columns decrying a tax code that could allow such a miscarriage of financial justice.
Upon closer inspection, the report proved much less incendiary than reported by the Associated Press and various right-wing blogs. As the New York Times' David Leonhardt noted: "The 47 percent number is not wrong. [...] But the modifiers here — federal and income — are important. Income taxes aren’t the only kind of federal taxes that people pay. There are also payroll taxes and investment taxes, among others. And, of course, people pay state and local taxes, too."
Leonhardt went on to succinctly summarize the rationale behind wealthy Americans having a significantly higher tax rate.
There is no question that the wealthy pay a higher overall tax rate than any other group. That is an American tradition. But there is also no question that their tax rates have fallen more than any other group’s over the last three decades. The only reason they are paying more taxes than in the past is that their pretax incomes have risen so rapidly — which hardly seems a great rationale for a further tax cut.
Leonhardt is far from alone in his analysis. A chorus of bloggers, columnists and late-night satirists dissected the Tax Policy Center's report and offered their take on the federal income tax-less masses.
- Do All The Math Piggybacking on Leonhardt's story, The Washington Post's Ezra Klein explains that while wealthy Americans pay much more in income tax, their overall tax burden isn't nearly as skewed. "For upper-income folks -- journalists, television executives, congressmen, think tank employees -- the big hit is on income taxes, so they get pretty annoyed when they hear that lots of Americans don't pay any income tax," he writes. "But their experience is not typical. Most people's tax burden has a very different composition." Showing a graph from Citizens for Tax Justice to illustrate his point, Klein concludes, "Doesn't look so disproportionate now, huh?"
- More Money, More Taxes Amazed that the "representation without taxation" argument is actually treading water, the Guardian's Michael Tomasky caustically points out the rapidly growing income gap between rich and poor counterbalances the tax difference. "There has been a massive redistribution of wealth in this country. It's been to the top 1%. It is what the numbers say. As much as it infuriates people (just watch the comment thread), it is true."
- Commentary Says Just Enough to Get You Mad Between asking "Hey Granny, want any grey poupon with your... cat food?" and noting corporate giant Exxon paid no taxes to the U.S., Jon Stewart employs his singular wit to cut through the rhetoric:
Those Starbucks-sweeping, arugula-washing, Favo-fueling laundromat liberals and their government-leeching scheme to not pay federal income taxes! Of course they do most likely pay payroll taxes, state, local, sales and excise taxes, but the important thing is knowing that doesn't make you as mad, doesn't it?
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- Dear GOP and the Tea Party: Enough The Atlantic's Derek Thompson argues the 47 percent statistic is "a monster that Republicans have helped to create." Looking at the Earned Income Tax Credit--which pushes many Americans' federal income tax burden to zero--Thompson explains: "The EITC is a Republican creation. It was enacted in 1975 under President Ford (a Republican), and expanded numerous times over the last 35 years by Republicans." In a later post on Tea Partiers' outrage, Thompson briefly lays out their paradoxical position on taxes but has only so much common-sense explaining in him.
The party's labyrinthine position on tax policy isn't worth untangling any further. It's a Gordian Knot that deserves a guillotine.