Commentary: Mitt Romney writes off 47% of Americans

SOURCE: Tax Policy Center

COMMENTARY: 

Republican presidential nominee Mitt Romney has given up on 47% of Americans, writing off those who don’t support his plan to slash taxes for the wealthy, shift the tax burden to the middle-class, and gut federal funding to keep Americans – particularly seniors and children – out of poverty, in good health, and well-educated enough to compete in the global economy.

Read more: Transcript: Mitt Romney’s remarks on ‘Obama voters’ at a Florida fundraiser

SOURCE: Tax Policy Center

“There are 47% of the people who will vote for the president no matter what. All right, there are 47% 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,” said Romney. “These are people who pay no income tax. 47% of Americans pay no income tax. So our message of low taxes doesn’t connect… And so my job is not to worry about those people. I’ll never convince them they should take personal responsibility and care for their lives.”

Instead, Romney said he would focus on selling his low-tax platform to independent voters who are presumably more “thoughtful”.

Read more: Analysis: Romney’s tax plan would shift tax burden to middle and lower-income Americans

Romney’s comments were recorded at a private fundraiser in May that was hosted by Marc Leder, CEO of Sun Capital Partners, Inc. In the video obtained by Mother Jones, Romney didn’t appear to realize that he was being recorded.

At a press conference on Monday night, Romney doubled-down on his message that basically half of all Americans are mooches and “victims”. When asked by a reporter whether he was concerned about offending 47% of Americans, Romney acknowledged that he could have improved on the delivery of his message.

“Well, um, you know, it’s not elegantly stated – let me put it that way,” said Romney. “I was speaking off the cuff in response to a question and I’m sure I could state it more clearly and in a more effective way than I did in a setting like that.”

But instead of focusing on just polishing his message delivery, perhaps Romney should consider fact-checking or improving his ability to tell the truth for a change.

Romney’s statement that 47% of Americans don’t pay income tax may be accurate but it’s not truthful. 

Analysis by the independent, non-partisan Tax Policy found that about 53% of Americans paid federal income tax in 2011. So Romney was technically correct when he said that 47% of Americans don’t pay federal income tax. But Romney’s statement was not truthful because somehow he managed to overlook the nearly 30% of American workers who do pay federal payroll taxes on their wages. These workers make up about two-thirds of the 47% derided by Romney.

Here’s how federal payroll tax works: Half of the payroll tax is withheld from an employee’s wages; the other half is matched by the employer. For example, before the temporary Payroll Tax Credit was enacted (and extended through 2012), the Social Security tax rate was 12.4% (applicable to the first $102,000 of an employee’s annual wages) and the Medicare tax rate was 2.9% of total wages with no ceiling. So back in 2008, employers and employees would each pay 6.2% for Social Security and 1.3% for Medicare for their payroll taxes.

In fact, payroll taxes accounted for 35.6% of the total federal revenues collected in 2011 whereas federal income taxes accounted for 47.4%. In comparison, only 7.9% of federal revenues last year came from corporate income taxes.

Read more: Romney’s tax controversy shines spotlight on tax code that favors wealth over wages

Another important truth that Romney left out: about one-third of the 47% are low-income seniors and people making less than $20,000 a year.

According to the Tax Policy Center, about 10.3% of those who don’t pay federal income tax are elderly Americans. Technically, Social Security benefits are subject to federal income tax. However, those benefits may be exempt from being taxed depending on the senior’s reported yearly income, and seniors who rely on Social Security for their entire retirement income do not pay any federal income tax. After all, Social Security is supposed to keep low-income seniors out of poverty.

“Generally, if Social Security benefits were your only income for 2010, your benefits are not taxable and you probably do not need to file a federal income tax return,” according to the Internal Revenue Service’s website. “If you received income from other sources, your benefits will not be taxed unless your modified adjusted gross income is more than the base amount for your filing status.”

According to the IRS, retired couples who filed jointedly with an annual income of less than $32,000 did not have to pay income tax on their Social Security benefits in 2010; individual retirees who reported yearly income of less than $25,000 were exempt from paying taxes on their Social Security benefits.

The remaining 47% who don’t pay federal income tax are families that earn less than $20,000 a year, which would place them in the lowest income quintile. Many of the tax deductions and tax credits are designed to help low-income working families with children stay out of poverty.

“It’s shocking that a candidate for President of the United States would go behind closed doors and declare to a group of wealthy donors that half the American people  view themselves as ‘victims,’ entitled to handouts, and are unwilling to take ‘personal responsibility’ for their lives,” said Jim Messina, Obama’s campaign manager. “It’s hard to serve as president for all Americans when you’ve disdainfully written off half the nation.”

Who are the 47% that Romney won’t ‘worry about’? 

  • 28% are employees who earn wages and pay federal payroll taxes
  • 10% are low-income seniors who depend on Social Security benefits as their primary source of retirement income
  • 7% are low-income working families who earn less than $20,000 a year
  • 2% are others

 

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