Everyone is still trying to make sense (or in the Democrats' case, make hay with) Mitt Romney's disparging remarks about "the 47 percent," but where did he come with that number and why are these people not paying income taxes?
While Romney's statement is technically true, and widely used conservative talking point, it's highly misleading and hardly the justifies the critique that these tax shirkers "should take personal responsibility and care for their lives." Even conservative pundit Ramesh Ponnuru said that the argument was "an intellectual and political dead end." The two main problems with Romney's statement are that many of the people in that 47 percent aren't actually living off government handouts — and they don't all vote Democratic either. Economics writers all over the internet broke out the chart machines to debunk these two claims. Here's the basics:
For starters, as you probably know, the 47 percent only applies to federal income taxes: Not the numerous other taxes that people have to pay. For example, 28 percent of Americans don't pay income tax, but they do contribute payroll taxes, which is what funds the two biggest entitlement programs, Medicare and Social Security. However, they either make next to nothing in wages or they qualify for enough credits (dependent exemptions; mortgage, tuition or student loan deductions, etc) to wipe out their tax bill. A family of four that makes less than $30,000 a year can easily erase their tax liability though standard deductions. These people have jobs and may or may not receive any government assistance at all. This popular chart from the Tax Policy Center is where the 47 percent figure originates, but it shows how the numbers break down:
So that leaves 18 percent of people who do not work at all, or make so little that they don't even pay payroll taxes. More than half of that group (10 percent of people) are retired and elderly people. They live off pensions or Social Security benefits, which are not taxed. But they spent a lifetime paying into those funds and no one would call them irresponsible. Not even Mitt Romney wants to axe Social Security.
So that means that of the Americans who don't pay income taxes, 83 percent either have a job or are retired. The rest — less then 10 percent of the total population — are probably unemployed (though even unemployment benefits are taxed); are too poor to pay taxes, or simply didn't file a return. Some of them are even be rich people who found ways to avoid having any liability, although that's a very small number of Americans. Plus, depending on where they live, most people pay some form of state and local income taxes, property taxes, sales taxes, or other government fees. When you total those up and compare by income group, we all come out paying about as much in taxes as our share of income:
(One other point about payroll taxes too: If you do pay them, that's 15.3% of your income (half paid by your employer, the other half by you) or about 1.5 percent more than Mitt Romney paid in taxes in 2011.)
Secondly, there's Romney's argument that the people who are receiving government benefits will vote for Obama "no matter what." But the numbers don't support that idea either. Of the ten states with the highest percentage of non-taxpayers, only two of those states (Florida and New Mexico) went for Obama in 2008. The rest are in the Southern block of reliably Republican states.
That would suggest that a huge chunk of the people Romney was criticizing will actually be voting for him in November. Because taxes are so confusing, even to reasonably smart people, many of those in the 47 percent don't even know it. They think they're a giver, when they are actually a taker.
Finally, there is no question that more and more Americans rely on government programs than ever before. However, that is mostly unrelated to the tax argument. As Ezra Klein of The Washington Post; James Antle of The Daily Caller, and others have pointed out, some of the people most responsible for the decline in taxpayers are Republicans. Ronald Reagan's and George W. Bush's tax cut bills dropped million of working poor from our tax rolls, through generous credits and exemptions. Reducing the tax burden on these people has been the policy of both parties for decades and according to Antle, "There is little evidence that the people who have stopped paying income tax as a result of Republicans’ policies have moved leftward politically."