President Obama’s fiscal year 2015 budget proposes to increase taxes on individuals by over $820 billion and on businesses by about $500 billion, for a total of over $1.3 trillion in new taxes over the next ten years....
- Will McBride on NPR's All Things considered: Fiscal Illusion
Will McBride on NPR's All Things considered: Fiscal Illusion
ROBERT SIEGEL, HOST:
From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.
AUDIE CORNISH, HOST:
And I'm Audie Cornish. Republican presidential hopeful Mitt Romney admits he could've used more elegant language, but he's not backing down. Romney was secretly recorded speaking at a fundraiser in May and his comments were publicized yesterday by the liberal magazine "Mother Jones." Here he is telling wealthy backers that President Obama has a built-in base of support.
(SOUNDBITE OF VIDEO)
MITT ROMNEY: 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're entitled to health care, to food, to housing, to you-name-it. That that's an entitlement. And the government should give it to them. And they will vote for this president no matter what.
CORNISH: Romney also said that 47 percent of the public pays no income tax. NPR's Scott Horsley begins our coverage.
SCOTT HORSLEY, BYLINE: There's a lot to unpack in Romney's comment, which the candidate himself has described as off-the-cuff, but he seems to conflate people who don't pay income tax with those who are dependent on government benefits. On the tax question at least, his number is about right. Bob Williams of the Tax Policy Center says about 46 percent of Americans paid no income tax last year. At the worst of the recession, that number was above 50 percent.
BOB WILLIAMS: About half the people paying no federal income tax just have incomes too low. The other half benefit from the various tax preferences.
HORSLEY: Williams adds that most of those who don't pay federal income tax do pay other taxes, including the payroll tax, which helps to cover the cost of Medicare and Social Security.
WILLIAMS: About 3 out of 5 were working and paid federal payroll taxes. So, they're paying taxes, just not income taxes. And of the remainder, most are either elderly and retired or low-income families with children.
HORSLEY: More Americans will pay income taxes as the economy and incomes recover, but that won't erase a longer-term trend. The fraction of Americans paying no income tax has roughly doubled since the early 1990s. That's because policymakers increasingly rely on tax credits to reward low-wage workers, parents and others. In some cases, the refundable credits more than cancel out their total income tax bill.
WILLIAMS: Congress has chosen to use the tax system as a way of delivering benefits to families, rather than creating new spending programs. It's a lot easier to go home and say, I cut your taxes, then to go home and says, I created a new spending program, even though you can do the same thing through either means.
HORSLEY: At the same time, the Census Bureau says more and more Americans are collecting government benefits in form or another, and more of those benefits are flowing to middle-class families, rather than just the very poor. Chief economist Will McBride of the non-partisan Tax Foundation says there's always been a concern about that imbalance.
WILL MCBRIDE: The danger there is that in a democracy, if the tax burden is, say, entirely borne by a minority of voters, then you have an incentive for the majority to lobby for more generous government spending because they're not paying for it.
HORSLEY: So far, though, there's little evidence of that happening.
DEAN LACY: The blue states are subsidizing the red states.
HORSLEY: Dean Lacy is a political scientist at Dartmouth who's looked at which counties and states are net taxpayers to the federal government and which are net benefit collectors.
LACY: The states that receive the most overall in federal spending per tax dollar paid are the most Republican and they've been increasingly so since the 1990s. The states that are paying the most in taxes per federal dollar received are the most Democratic.
HORSLEY: Lacy suspects until now Republicans have been able to cast symbolic votes for smaller government without really jeopardizing their own popular benefits. With determined budget cutters, like Romney and Paul Ryan on the ticket, though, that could change. Scott Horsley, NPR News, Washington.
- Rep. Dave Camp deserves credit for introducing dynamic macroeconomic analysis into the tax reform discussion by requesting a dynamic score of his plan from the Joint Committee on Taxation (JCT).
- According to...
- The combined federal and state top marginal personal dividend tax rate in the United States is 28.6 percent.
- The United States’ top marginal tax rate on personal dividend income is 9th highest in...
Join the Tax Foundation's fight for sound tax policy Go
Tax Policy Blog
The official weblog of the Tax Foundation.
Tax By State
For information on your state, select it from the drop-down menu.
Ask a Tax Expert
Contact information for Tax Foundation policy staff Ask