“THOSE PEOPLE”

Mitt Romney’s remarks were not only obnoxious and out of touch – they were untrue.

U.S. presidential candidate Mitt Romney made big news on Monday with the release of a recording of candid remarks he made at a high-dollar donor event in Boca Raton, Florida last Spring.  Among the most controversial of his assertions was that "there are 47 percent of the people who will vote for the president no matter what. All right, there are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it."

Leaving aside the contempt that Romney expressed for roughly half of the population he is seeking to represent as President, his statements revealed an alarming lack of knowledge about who actually pays taxes in America, how much they pay, and what they receive from government in return.

Romney was reflecting a widely, perhaps universally, held belief among wealthy conservatives that almost half of all Americans are freeloaders who live off of unearned benefits that are paid for by the tax dollars of a dwindling number of hard workers and entrepreneurs.  The “takers” and the “makers”, as Paul Ryan calls them.

This is a very useful, not to say flattering, narrative for wealthy people who want to keep their own tax rates as low as possible without feeling the need for rationalization or remorse.  If tax dollars are being wasted on lazy people, then Romney and Ryan’s policies of tax cuts for the wealthy and reduced government spending on social services are not only justifiable – they are virtuous.

But reality is at once more complicated and less convenient.  While it’s true that almost half – 47%, to be precise – of U.S. households did not pay federal income taxes in 2011, there are plenty of other federal, state and local taxes which everybody pays, including the poorest Americans.

All U.S. residents who are employed pay federal payroll taxes, usually by having them withheld from their wages.  And even the unemployed pay a variety of federal and state sales taxes and excise taxes on the goods and services they consume every day, including groceries and gas.

(chart from the Tax Policy Center)

When all taxes are considered, the median U.S. household, which earns about $50,000 a year, pays about 18.5% of its income in taxes.  In 2010, the poorest 20% of Americans earned an average of $12,500, of which $2,025 went towards federal, state and local taxes.  This amounts to an effective tax rate of 16.2%.  Romney himself has been cagey about discussing his own tax burden with the public, but the one year of returns that he has released indicate that he paid 13.9% in federal taxes in 2010.

What’s more, Romney’s ill-informed assertions insulted a major part of his own base of political support – the elderly, and Southerners.  Eight of the ten states with the highest percentages of federal income tax non-payers are reliably red-states.  (The other two are Florida – a state whose voters Romney is presumably trying not to alienate – and New Mexico).

A little more than a fifth of those who don’t pay income taxes are retired people, in other words the elderly, who tend to lean Republican as a group.  This group does indeed depend on the government for healthcare and other things – because they receive Social Security and Medicare payments, for which they’ve already paid in the form of payroll taxes throughout their working lives.  It hardly needs stating that the reason most of the elderly don’t pay income taxes is that they are no longer in the work force.

It’s also important to point out that the 47% number is unusually, and temporarily, elevated because of the financial crisis and the ensuing high levels of unemployment and underemployment (part-time and low-paying jobs).  In 2008, when the crisis had yet to reach its peak, the number of Americans who didn’t pay federal income tax was considerably lower at 36%.

Does Mitt Romney even understand any of this?  It’s impossible to say.  Either he’s ignorant of the reality or he’s taking deliberate political advantage of the ignorance, and the prejudices, of his audience.  In any event, there is great confusion about this issue and Mitt Romney is either an aggravator of that confusion, or its victim.  Neither of these possibilities does him any credit.

Finally, it’s worth noting that not all Americans who don’t pay federal income taxes are poor.  Many of the country’s wealthiest citizens manage to avoid paying any federal income tax at all, thanks to a range of deductions, loopholes, deferments and write-offs designed specifically for the investor class.  According to the IRS, about 1,470 millionaires paid no federal income tax at all in 2009.  So that 47% who don’t pay federal income taxes includes not only the poorest Americans, but some of the richest as well.  Perhaps some of them were sitting in that very room in Boca Raton as Romney made his spurious case.

J.P. Bernbach is the author of “Pack of Lies: Debunking the 40 Most DestructiveConservative Myths in America”