Who to tax? The poor!

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The really funny thing about this claim that 47% of households pay no taxes is that it's false. They may have paid no federal income taxes last year, in the middle of the worst economic collapse since the Great Depression (and after the Bush administration lowered the lowest tax rate for dividends and capital gains to 0% - yes, that's ZERO - the last few years*).

But taxes? Everyone pays taxes. And even if you restrict it to federal taxes, things actually look a lot differently than what you're hearing on Fox "News." From David Leonhardt:

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.

Even if the discussion is restricted to federal taxes (for which the statistics are better), a vast majority of households end up paying federal taxes. Congressional Budget Office data suggests that, at most, about 10 percent of all households pay no net federal taxes. The number 10 is obviously a lot smaller than 47.

The reason is that poor families generally pay more in payroll taxes than they receive through benefits like the Earned Income Tax Credit. It’s not just poor families for whom the payroll tax is a big deal, either. About three-quarters of all American households pay more in payroll taxes, which go toward Medicare and Social Security, than in income taxes. 

But why are people talking of raising taxes on the rich?

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.

Thanks to our misguided economic policies, at least since Ronald Reagan, the wealthy have made out like bandits, while the rest of us have been treading water. The wealthy simply have a bigger share of the wealth than they did decades ago. And thanks to tax cuts that overwhelmingly benefited the wealthy, they pay less in taxes now, too.

But this can't be right. Why would Fox "News" and right-wing talk radio personalities constantly harp on this tax issue? It couldn't have anything to do with their own tax brackets, could it? Glenn Beck** made $32 million in the past year. Sarah Palin has made $12 million just since last July, one hundred times what she was making as governor of Alaska. (Is it any wonder that she quit halfway through her first term?) Rush Limbaugh, of course, beat them both with an income of at least $54 million annually.

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. 

It's not too surprising that it's these same wealthy blowhards who are scaring people about estate taxes - archly renamed "death taxes" - either, is it? Very few of the people they're scaring have estates large enough to worry about federal taxes, but people are just too ignorant or too dumb to understand the truth.

* Don't you wish you lived on investment income? Unlike wages, which are always taxed at the full rate, the maximum rate for qualified dividends and long-term capital gains is 15%, and they're currently tax-free for anyone in the 10% and 15% tax brackets. Basically, if you work for a living, you get shafted.

** Of course, Glenn Beck of Fox "News" told Forbes magazine, "I could give a flying crap about the political process,... We're an entertainment company." So he apparently feels that his viewers are entertained when he lies to them. Caveat emptor.