Surfing the internet today I stumbled onto a new site made redstate.org founder, Erik Erickson, called "We are the 53%." This site is meant to be something of a counterweight to the "We are the 99%" site that has been a prominent part of the Occupy Wall Street Movement. The "We are the 53%" website has drawn inspiration from the figure that only 53% of Americans pay federal income taxes. Sitting at the top of the home page is a statement: "Those of us who pay for those of you who whine about all of that...or that...or whatever."
So this got me thinking about that figure, that only roughly half of all Americans pay federal income taxes. It also got me thinking about a report that I read earlier this year that was done by the Center on Budget Policy and Priorities (CBPP) that looked into that figure. After rereading that report, I thought it would be helpful to outline some of the main points.
One of the first points is that the figure which inspired the blog only pertains to one tax: income tax. The figure does not include payroll taxes or state and local taxes; virtually all Americans pay those taxes, among others. In 2010 the poorest fifth of households paid 12.3 percent of their income in state and local taxes. The year that the 53% number comes from, 2009, was an unusual one. During that year there were policies from the American Recovery and Reinvestment Act (the stimulus) that had in them temporary tax cuts which do not reflect a normal year. Furthermore, in 2009 a large section of the population was unemployed for the entire year, which granted them no income, thus no income taxes. There are several other factors causing households to not pay federal income taxes, go read the report if you're interested in them.
A breakdown of the lucky "duckies" that pay no federal income taxes is helpful. The report found that 70% of people that don't pay federal income taxes don't do so because they are, well, poor. That doesn't mean they don't pay taxes though. As outlined earlier these 70% still pay payroll taxes as well as state and local taxes. Additionally, households that don't pay income taxes tend not to do so for only short periods of time, often due to temporary layoffs. Once these households get back on their feet, they tend to resume paying income taxes. Of the remaining 30% of households that don't pay federal income taxes 17% are seniors receiving Social Security, and 13% are students, people with disabilities, unemployed people, or people with jobs who make very little money.
I hope that sheds some light on the 53% figure. Now, a few more thoughts on the new site: As I read through all of the posts, an obvious theme jumped out at me, an unsurprising one given the contributing audience: personal responsibility. Several posts outlined people's stories of facing adversity, accepting their position in life but not letting it hold them down, then, against all the odds, prevailing; a living embodiment of the American Dream. I'm happy for all of these people, they did wonderful things given their circumstances. But that doesn't mean everyone can do the same thing. Each person has their own story, their own set of circumstances, their own luck, their own misfortune. To claim that because some people are able to turn terrible situations around then all people should be able to, is very strange to me. In an economy that has between 4 and 5 job seekers for every job opening, how is everyone supposed to turn their luck around?
Our economy stinks. With massive, persistent unemployment, stagnant and falling wages, among other things, massive pain is being felt by millions of Americans. I find it an odd proposition that, given everything going on with our economy, people feel compelled to express their anger at the fact that the poorest among us don't have to pay one particular tax.
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