Category: Taxes

The facts regarding the percentage of Americans are as follows:

• Roughly half of all Americans pay no federal income taxes specifically
• About 86% of Americans pay Federal taxes of some sort (because everyone who earns a paycheck pays payroll taxes).
• Lower income earners still pay local/state taxes
• Everyone pays a variety of sales taxes
• Payroll and sales taxes are highly regressive (they account for a much higher percentage of a lower income earner’s paycheck).
• The reason about 50% don’t pay federal income taxes is because the bottom 50% have seen their real earnings drop over the last few decades, as the top 1% has seen a corresponding increase in wealth

What a standard paycheck looks like

This is what a standard paycheck looks like (in California).  Those who claim that half of Americans pay no taxes are really just referring to the item 1 (federal withholding).
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The ‘Fiscal Cliff’ deal included allowing the payroll tax holiday to expire.  This tax holiday actually began under Obama so it’s merely going back to the same rates they were when Obama was inaugurated.  Nevertheless, many on the right are screaming over the ‘tax increase’  and claiming this is an example of Obama breaking his promise not raise taxes on lower and middle/income earners.

Given the firestorm this has created, one would think that the sources of said firestorm would have expressed elation over the payroll tax holiday and credited Obama with lowering taxes then. One would of course, be wrong…

I somehow found myself watching Fox News earlier (for the first time in awhile).  Greta Van Susteren was interviewing Paul Ryan.  Great (who Bill O’Reilly claims is a “liberal”), was throwing softballs for Paul Ryan to knock out of the park and not surprisingly didn’t challenge him on his claim that Barack Obama’s plan to raise the top marginal tax rate (meaning, those making $250,000 or more) would affect small businesses, because many of them file their earnings as income.

As the CCBP noted in 2010 when the debate on allowing the Bush tax cuts to expire on the wealthiest Americans was in full swing:

 In reality, however, extending the tax cuts would do little for small business because only the top 3 percent of people with any business income, let alone income from a small business, would benefit. [1] Over the long term, an extension would likely harm the economy — and thus small business — by adding about $1 trillion to deficits and debt over the next decade and even larger amounts in subsequent decades. [2]

http://www.cbpp.org/cms/index.cfm?fa=view&id=3251

But facts are never a problem for people like Paul Ryan.  His goal isn’t really to help economic recovery so much as keeping true to his small government ideology and keeping his pledge to Grover Norquist.