The no taxes myth

 Posted by at 09:44  economy, Politics, Republicans
Apr 142010

A few days ago, someone published a report stating that 47% of the households in the United States will pay no federal income tax for the year 2009. The right wing noise machine immediately jumped on this report (with glee) as proof of the so-called “nanny state” being created by the liberal Democrats. Of course, as with anything that is spouted by the right wing noise machine, there is what they say and then there is the truth. David Leonhardt of The New York Times explains…

Yes, 47% of Households Owe No Taxes. Look Closer.

Forty-seven percent.

That’s the portion of American households that owe no income tax for 2009. The number is up from 38 percent in 2007, and it has become a popular talking point on cable television and talk radio. 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.

Given that taxes are likely to be one of the big political issues of the next few years — and maybe the biggest one — it’s worth understanding who really pays what in taxes. Once you do, you can get a sense for our country’s fiscal options. How, in other words, will we be able to close the huge looming gap between the taxes we are scheduled to pay and the services we are scheduled to receive?

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.

Click on the headline to read the entire article.