Who pays taxes?

Blogosphere is abuzz about Romney’s comments about the 47 percent of Americans who do not pay income taxes, and their unwavering support for President Obama. Many economists and pundits are already reacting to the, well, incompleteness of the statement,  but let me offer my simple thoughts:

1. Even though 47% of individuals may not pay federal income taxes, almost all pay some other kind of tax. This includes additional payroll taxes like Social Security (28.3% from the 47% pay other forms of payroll taxes) and sales taxes (which are paid by nearly everyone who buys stuff). See Matt Yglesias for the data.

2. Of those who pay neither federal income nor payroll taxes, the majority are elderly. This has two implications on the current conservative narrative. First, these are not decidedly Obama supporters, as seniors typically vote Republican. But second, this goes counter to the notion that individuals who do not pay taxes are lazy. Seniors do not pay taxes because they are retired. [The same logic applies to full-time students who do not pay taxes because they are in school. I wouldn’t call full-time students lazy.]

3. Finally, it’s important to note that the policies which allow 47% of Americans to pay no federal income tax have been implemented by administrations from both parties. Various tax cuts and tax credits allow many of these individuals to pay so little – and why should we fault them for responding sensibly to an incentive to pay less? Particularly when those with high incomes are defensive of their often-low tax burden?

In sum, conservatives continue to attempt to paint a picture of this near-majority of Americans who are mooching off of government, not doing their share, and who are in the President’s corner. A closer look at the numbers reveals this isn’t the case. It’s one thing to spin a story about the makeup of the electorate, but as always, the devil is in the details.

Read more from Mark Thoma on the Hamilton Project release (which provided the data), or a recap of reactions from Andrew Sullivan.



  1. Sick and tired of paying taxes · · Reply

    Of the remainder who DO pay taxes, they also pay gas tax, payroll tax and if they own a business they pay the matching payroll tax, property tax on not only real estate but ALL business assets including inventory tax. I would love to know the % of those that are NOT paying tax that are NOT the elderly. I also know FOR A FACT of the vast number of earned income credits that are totally fraudulent. I mean, how much tax do you all think is fair for a person to pay? Over 1/3 of a person’s income in federal income tax is not enough? And you think they should pay more? Dividends are already taxed to corps and then are taxed again at 15% to those who are in above a 15% tax bracket. THose in the 15% tax bracket pay -0- on dividends or capital gains!

  2. Two responses here:
    1) The data which answers your question is in the link above. There are 18.1% of individuals who pay neither federal income nor payroll taxes. From this 18.1%, 10.3% are elderly. This amounts to nearly 57% of all those who are not paying taxes.
    2) You say “And you think they should pay more?” Nowhere in my post do I suggest that anyone should pay more in taxes. This is an example of a Strawman argument, in which you misrepresent my position for the purposes of your comment (see yourlogicalfallacyis.com/strawman).

  3. I’ll start off by saying that Romney’s comments were not appropriate, nor were they very smart for a politician trying to get elected. That said, the fact that nearly half of the American taxpayers contribute nothing in federal income tax is worthy of discussion. I believe it is the responsibility of all citizens (with certain exceptions) to maintain and fund the federal government. Payroll taxes do not accomplish this because they are used for specific entitlements such as social security, medicare, and unemployment insurance. Sales tax, property tax, utility tax, etc are also targeted to state and local municipalities, and do not fund federal expenses. Paying these types of taxes isn’t a waiver to paying income tax. I also really appreciated your comment about the fact that the policies which allow nearly half of the country to pay no income tax were implemented by BOTH parties over the years. So true. Something we should all keep in mind when it’s time to vote in November.

  4. Totally agree with your points. It is a discussion worth having, and I’m almost glad the comments are prompting such a discussion. I would like to point out that even though such a high number of Americans do not pay federal income tax, many of them (I can’t even give a reasonable potential number) either have paid or will pay federal income tax. Retirees have likely worked at some point during their lifetimes, and paid income tax. Full-time students are out their earning degrees to (hopefully) allow them to make enough to pay income tax. In that sense, there will always be some share who do not pay, and a big driver of this will always be demographics.

    Also, thanks for pointing out my comment on bipartisanship. It is increasingly important to point out that many issues are not as partisan as they may seem. I always aim to be non-partisan in my commentary, and instead attempt to rely on logic and sound reasoning.

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