Just Who Payes Taxes? And Why Is Your Favorite Talk Show Host Complaining?

Posted by | April 14, 2010 11:31 | Filed under: Top Stories

Yes, it’s true, as we’ve pointed out, that 47% of households owe no income taxes for 2009. However, as David Leonhardt explains in the New York Times, that doesn’t begin to tell the whole story.

The answer is that tax rates almost certainly have to rise more on the affluent than on other groups. Over the last 30 years, rates have fallen more for the wealthy, and especially the very wealthy, than for any other group. At the same time, their incomes have soared, and the incomes of most workers have grown only moderately faster than inflation.

So a much greater share of income is now concentrated at the top of distribution, while each dollar there is taxed less than it once was.

The 47 percent number is not wrong. The stimulus programs of the last two years — the first one signed by President George W. Bush, the second and larger one by President Obama — have increased the number of households that receive enough of a tax credit to wipe out their federal income tax liability.

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 capital gains taxes, among others. And, of course, people pay state and local taxes, too.

What isn’t being counted in the 47% number is payroll taxes which is paid disproportionately by the less wealthy.  Three-quarters of Americans pay a larger portion of their incomes in payroll taxes than in income taxes. These dollars go towards items like Medicare and Social Security.  And the wealthy have more of an ability to hide income from the taxman. So while they understate their income, their tax rates are overstated.  Yes the wealthy pay more in taxes, but their tax rates have fallen more than any other group during the last 30 years.

So why are those radio and television talk show hosts spending so much time arguing that today’s wealthy are unfairly burdened? Well, it’s hard not to notice that the talk show hosts themselves tend to be among the very wealthy.

No doubt, like the rest of us, they don’t particularly enjoy paying taxes. They are happy with the tax cuts they have received lately. They would prefer if other people had to pick up the bill for Medicare, Social Security and the military — people like, say, firefighters, preschool teachers, computer support specialists, farmers, members of the clergy, mail carriers, secretaries and truck drivers.

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Copyright 2010 Liberaland
By: Alan

Alan Colmes is the publisher of Liberaland.

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