You do know that fifty percent of people in the States do not pay any income taxes, and that those on government benefits get more money back in fully refundable credits, like the earned income credit and child tax credits. There are also many people down here who get free medicaid, free prescriptions through PPARX, who get their rent paid for under Section 8, who get free food stamps, utility assistance, and who get welfare cash benefits, and may even get a disability check on top of it, and not to mention full Pell grants to attend college for free, and all of this is tax free. The fact is most Canadians have no clue about how generous the American welfare system is. The real problem is the people who work, and are not eligible for any of the benefits are really suffering. That those who are on public assistance may have more dispensible income at the end of the month.
Fact Check: Mitt Romney's '47 Percent' Claims Wildly Inaccurate
Mitt Romney's now infamous comments about half of America made at a May fundraiser are not only offensive, but also inaccurate.
In a video taken at the fundraiser and leaked on Monday, Romney claimed that 47 percent of Americans are Obama voters that "pay no income tax," "are dependent upon government" and "believe that they are entitled to health care, to food, to housing, to you-name-it."
Romney's 47 percent figure lumped together separate groups that have little relation to one another. Most Americans do pay taxes: The poorest fifth of Americans paid an effective tax rate of 17 percent last year, and the second-poorest fifth paid an effective tax rate of 21 percent, when factoring in payroll taxes, sales taxes and property taxes, among others, according to Citizens for Tax Justice.
It is true that 46 percent of American households did not pay federal income taxes last year, according to the Tax Policy Center. But that number is unusually high, in part because of the recession -- and a majority of that 46 percent still paid payroll taxes. Only 18 percent of American households paid no income taxes and no payroll taxes last year. It is largely low-income seniors and very poor people that legally don't pay federal income taxes or payroll taxes, according to the Center on Budget and Policy Priorities and the Tax Policy Center.
It was also inaccurate for Romney to claim that those who don't pay federal income taxes would vote for President Obama "no matter what." Nearly all states with a high percentage of Americans that don't pay federal income taxes vote Republican in presidential elections, according to the Washington Post.
Moreover, Republican policy -- on the part of Ronald Reagan and George W. Bush -- has pushed to move poorer people off of the federal income tax rolls, as noted by the Washington Post's Ezra Klein and Newsweek's Matt Zeitlin.
As for entitlements, contrary to Romney's portrayal, more than 90 percent of entitlement benefits go to the elderly, seriously disabled or members of working households, according to the Center on Budget and Policy Priorities.
Romney stood by his comments on Monday, telling reporters that though his comments were "not elegantly stated," Obama's approach is "attractive to people who are not paying taxes."
Mitt Romney's '47 Percent' Includes Real-Life Millionaires
In that crowd of wealthy donors at Marc Leder's Boca Raton sex palace that listened to Mitt Romney blast Americans who don't pay income taxes, there were probably a few people who didn't pay income taxes.
Wonder if they're thinking of asking for a refund today.
The vast majority of what Romney calls the "47 percent," the percentage of Americans who don't pay federal income taxes --which is really 46 percent, but who's counting -- are working poor, retirees and the disabled, including disabled veterans, along with students and some people suffering long-term unemployment after the Great Recession. As Bonnie Kavoussi and others have pointed out, many in this group still pay federal payroll taxes, likely at a higher rate than Romney's own tax rate.
But a tiny sliver of this 47 percent includes the 1 percent -- the country's top earners.
According to the non-partisan Tax Policy Center, some 3,000 of the 76 million taxpayers that were expected to pay no federal income taxes in 2011 were members of Romney's cohort, making nearly $2.2 million per year, which puts them in the top 0.1 percent income bracket.
Another 24,000 taxpayers expected to pay no income taxes last year were in the top 1 percent income bracket, according to the TPC, making between $532,613 and $2.2 million per year.
How the heck does this happen? For one thing, as Kevin Roose at New York magazine points out, these wealthy earners benefit to an unusual degree -- as Mitt Romney himself does -- from tax breaks on investment.
Capital gains on investments are taxed at 15 percent, much lower than the top income-tax rate. "Carried interest" income, which Romney and other private-equity executives enjoy, is taxed at the capital-gains rate. And many wealthy taxpayers take advantage of a feature that lets them recognize past investment losses to lower or eliminate their tax bills.
But the main (legal) reasons the One Percenters pay no income taxes are far less exotic, according to an Internal Revenue Service study of 2009 tax data. For the most part, these people get off with paying nothing because of run-of-the-mill stuff like getting their income from tax-free municipal bonds and plain-vanilla itemized deductions (monocle prescriptions, top-hat cleaning, manservant housing).
A lot of big and small companies, meanwhile, also do not pay taxes. Some even get so many tax breaks that the government pays them.
In his comments, Romney suggested that the 47 Percenters would never vote for him because a promise of a tax cut would be meaningless to them. But some of that group is probably contributing to his campaign, and they might well be hoping to keep some of the tax breaks they already have.
Edited by Sharpshooter, 18 September 2012 - 12:51 PM.