Happy tax freedom day (!,?) You may have heard this week that 47% of Americans don’t pay “taxes.” It’s all over conservative media, repeated endlessly.
Hopefully, as readers of my tax/spending posts, you didn’t fall for it. It’s true that 47% of American households do not pay federal income taxes. But, that’s only one tax at one level of government, and the people harping on it know that few people will notice if they just repeat this one factoid over and over. The purpose of this is to help people believe that one-half of the country is spongeing off of the other, “productive” half. Ayn Rand lives.
Truth is low-income Americans pay lots of taxes — just not the same ones that Republicans want to cut. Working people pay Social Security taxes, sales taxes, excise (cigarette/liquor) taxes, etc. They don’t tend to pay income, inheritence, or capital gains taxes. In fact, about three-quarters of all American households pay more in payroll taxes, which go toward Medicare and Social Security, than in income taxes.
Read this for the context behind the cherry-picked 47% thing.
Relatedly, the federal income tax is ridiculously complicated, for several reasons. The big one is that the tax code is used to make all kinds of policy; i.e., rewarding some behaviors and dicouraging others. It’s often politically easier to do stuff through the tax code than through spending programs. Problem is eventually the tax code becomes so complicated as to be absurd. A related reason is that it’s easy to hide goodies for the rich and well-connected in the tax code. That’s why the super-rich (individuals and many of the largest companies) pay so little in taxes.
But, sometimes I wonder whether they make income taxes so laborious in part so we’ll hate it more and complain about it more. When is the last time you heard someone complain about the 20 hours it took them to calculate their FICA tax?
I’m going to get off of tax and spending. My next Civics 101 post will break down who does and does not vote in our elections and its implications for how elections are fought.