Mythbusters
There is a lot of persistent myths around about debt, deficit and taxes that are fueled by the GOP. One myth is that Obama is fiscally irresponsible and that his programs are creating unprecedented deficits. It’s true that the deficits are high, but it was caused by Bush’s tax cuts, Bush’s war, Bush’s recession and Bush’s bailouts. The Obama recovery has started turning the deficit around already:
The federal deficit is running significantly lower than it did last year, with the budget gap for the first half of fiscal 2010 down 8 percent over the same period a year ago, senior Obama administration officials said Monday.
The officials attributed the results to higher tax revenue and to lower spending than projected on bailing out the financial system. If the trend continues for the rest of the year, it would mean the annual deficit would be $1.3 trillion — about $300 billion less than the administration’s projection two months ago for 2010.
The recovery is still in its very early stages and still fragile. I hope the deficit peacocks don’t mess it up by insisting on spending cuts when the recovery is still uncertain.
A second persistent myth is that Republicans cut taxes while Democrats raise them.
In time for tax day, Citizen for Tax Justice releases a new fact sheet [pdf] on your federal tax bill for 2009. It’s good news, for 98% of working families.
According to a recent CBS News/New York Times poll, the vast majority of Americans do not perceive that they have received a tax cut from President Obama. Asked if the President “has already raised taxes this past year,” 53 percent of those polled said that the President has “kept taxes the same,” and 24 percent think that the President has “raised taxes.” A mere 12 percent believe that the President has cut their taxes.
This is an astonishing level of misunderstanding. The truth is that the major tax cuts enacted in the 2009 economic stimulus bill actually reduced federal income taxes for tax year 2009 for 98 percent of all working families and individuals. These tax cuts saved working families and individuals an average of $1,158 on the tax returns they will file by April 15. (The median tax cut was approximately $600.)
I know my family saw quite a substantial tax break this year and I think a lot of people are starting to realize they got a break as well.
How this message is either ignored or disconnected by the major media outlets is a continuing source of frustration to me.The TEABAGGERS get ALL the press and the TRUTH is wrinkled up in a wad and tossed away like so much meaningless garbage.
It’s because the right has successfully worked the refs for 30 years. The thing the media dreads most is being called “liberal” by angry rightwingers so they’ve decided the best way is to let lies go unchallenged. As I posted in yesterday’s open thread, David Gregory has said that it’s the audience’s job to do the fact-checking. The media won’t do it, and most of the time don’t seems to understand the issues.
Amplifying UI’s point, the Right is also whining this week that “47 percent” don’t pay federal income tax. [Can you say, “welfare queens, boys and girls?”]
After a few iterations, this becomes “47 percent don’t pay any tax,” which is a huge lie. David Leonhardt of The Times explains why, better than could I, but in a nutshell, the middle class and the poor pay an outsized share of other taxes:
http://www.nytimes.com/2010/04/14/business/economy/14leonhardt.html
The federal income tax (and the temporarily suspended federal estate tax) are really the only progressive taxes – and even the federal income tax is tilted in favor of higher-income taxpayers after the changes of the last 30 years.
Every other tax is borne more heavily by the middle class.
If you look at total tax burden, the rich pay about 16% of their income in taxes while the middle class pays 42% of their total income in taxes. That’s because a lot of income streams for the rich have lower taxes, like capital gains and investment income.
The poor and middle class pay Social Security tax on all of their income while the rich pay SS tax only on the first $100,000 or so.
If we want to talk about welfare queens we should talk about Exxon Mobil and GE paying absolutely $0 dollars in U.S. tax, while taking about $1B in taxpayer money.
After a few iterations, this becomes “47 percent don’t pay any tax,” which is a huge lie.
Dead on. I don’t know why Republicans think this is a good talking point for them. We are living in the tax landscape they created.
This 47% figure is direct evidence of the contraction of the middle class which occurred on Republican watch as a direct intentional result of Republican economic policy.
Republicans must love poor people, because they made so many of them.
The reason those 47% don’t owe income tax is because they don’t make enough money. I am sure that 47% would LOVE to be in a bracket where they owe income tax.
Here we go again UI, dragging in the excise taxes, and user taxes, and every other embedded tax into the calculation. The rich may only pay “only the first 100k or so in Social Security”, but they are also capped at what they can draw back too.
Believe me, I believe in paying taxes. I believe in paying my fair share, and contribute to some common good. But really UI, the very programs I pay a fair share, and then some, I can’t get a break on privately. I get mandated to pay taxes for all these things, that people rightfully need AND then I rightfully need something AND I get to pay full freight for that too.
For example–I pay out of state tuition for a couple of kids. Fine, I should pay out of state tuition. But why the heck am I assessed (once I get there) one of those state’s “Commitment to College for All” for that’s state graduating h.s. seniors to fund THEIR citizens? And citizen I use loosely, because this funding stream is also provided to undocumented, at this point adult enrollee. Don’t you think my out of state tuition dollars was more than fair enough? We all know the mark-up on that pricetag.
If it were up to me, the whole dang tax code would be smoldering in some fireplace. It is way too cumbersome at least, and grossly prescriptive at every line. Really, interest in a race horse trumps deductions to charities? I just don’t get it–but I get the bill–and hear the complaint of everyone who THINKS they are paying too much–when in actuality, they at least were able to maximize their deductions. Heck–I get Alternative Minimum Tax. Federal Tax 2.0!!!
I’ll pay, I’ll pay–but at some point I really would like to chose the charity.
I think the complication in our taxes comes from calculating taxable income, but reforming that would mean taking away tax breaks that some people like.
I think the argument that one doesn’t like paying this tax or that tax is a loser’s game. I don’t have kids, yet I pay school tax. We’re not going to start individualizing taxes.
Citizens for Tax Justice is right that the middle class and poor pay a lot of embedded taxes. They underestimate the percentage the rich pay who also pay embedded taxes on top of the higher income tax rates. Everyone’s ox is being gored. That is why I favor junking it all and going to a progressive national sales tax like the FAIR tax.
You do and you will pay school taxes. That is one that is more of an annuity paid over a lifetime of a taxpayer, because the immediate yearly payment of your cost of education could not be collected from your parents or you. Please feel free at anytime to access that funding stream set up both in arrears, and going forward :).
Joanne,
The problem with the anuity argument is that I’ve been paying school taxes for forty years — at what point have I paid off my “grant” for 12 years of public education?
We pay school taxes as an investment in our future. An educated citizenry makes America possible. If anybody doubts that see Afghanistan. I don’t love school taxes but they are the very best taxes we pay.
I could grump a long time over the percentage of my tax dollars that go to the Pentagon. But that doesn’t change my obligation as part of this society to pay my taxes. Just as safety-net programs that piss of the right-wing don’t exempt them from paying their taxes. We don’t get to choose one from column a and one from column b in the tax equation. Whining and whinging about welfare-queens, who never existed but were trumped up by President Regan, is about as effective as me whining and whinging about the cost of our military-industrial establishment. Or, closer to home, the Welfare-Farmers. Ya never hear the right-wing complaining about them.
Exactly Rebecca. Our system is that we elect representatives to legislatures to represent our interests. Those include taxation. If we don’t like our taxation, we need to elect new representatives or change the minds of the ones we have.
Old people should pay school taxes to keep the little urchins off the streets, mugging them and breaking into their houses. That is a huge benefit.
And again Rebecca, those school taxes are to the common good I mentioned. As are roads, social security, defense et al. What I would suggest is–come up w/ a rate–then quit excluding me, fractioning me, and capping me– maybe then we wouldn’t have to get into all these gyrations of gambling losses, capital gains, and a stupid home office. So yea, I agree w/ ya to throw the bums out that have so overcomplicated the tax code–but the problem is so pervasive, it leaves everyone feeling like they’re the exception. Great example–many this year are the beneficiary of lower taxes. Now the complaint you hear is ” I’m not getting as much back this year”. HELLO–they completely forgot that weekly bump that might have happened in take home.
And your “grant” is never paid off–unless you are in a tax forgiveness demographic the senior citizens might have in some places. That’s the common good for years past and years ahead, that doesn’t just pay your 12 years, but helps with the investment cost of children who are going to be there to fix our cars and repair our broken hips, that we collectively underwrite as America’s future.
I just don’t think this progressive tax stuff is the way to go. It’s hide and seek in the worst neighborhood. And then comes Big Sam to lay down these “other” rules.
Don’t get too excited about the small tax cut that we got. It is only short term while the scheduled increases are permanent.
Well DR–that’s why they titled this post “Mythbusters” :)!!
Here is a good pie chart that shows the lie in that “47% pay no taxes.”
Notice that wage taxes (Social Security and payroll taxes) represent just as big a chunk of Federal receipts as individual income taxes. Wage taxes are of course regressive, with the lowest rates paid by the highest earners.
Notice the relative size of corporate income tax.
Notice the tiny slice of Estate and Gift tax combined.
“Don’t get too excited about the small tax cut that we got. It is only short term while the scheduled increases are permanent.”
That is why the cuts were in the “stimulus” bill.
And you are really going to have to make up your mind whether lower income people are paying too much tax or not enough tax. I can’t tell where you guys stand on this one.
The increases were scheduled by Republicans, so look in the mirror.
anon–I’m not sure that’s a good chart to use. It shows division of receipts–not number of payers.
The number of payers is implied in the chart because it also shows wage taxes, which are not included in the usual talking point about “47% pay no tax”.
Wage taxes, paid almost entirely by lower income and middle class, are equal to all individual income tax combined.
The Obama tax cuts were aimed at the middle class and they are permanent. I doubt I’ll notice any change when the Bush tax cuts expire since they were targeted to the rich.
The Obama tax cuts were aimed at the middle class and they are permanent.
I stand corrected. If Republican David says water is wet, you have to fact-check it. It is exhausting.
The biggest revenue boost to close the gap would come from eliminating the Bush tax cuts passed by Congress in 2001 and 2003. If all of them were wiped out, the government would collect about $2.8 trillion more in taxes over the next decade, according to the Congressional Budgeting Office….
Let’s be consistent–if the cuts in tax rates last decade can be credited to Bush (due to a law he signed), then we have to call the boost in tax rates next year the Bush Tax Hikes.
Somehow Faux News hasn’t joined this movement yet. I’m holding my breath.