September was a tough month for the GOP presidential campaign, marked by a series of unfortunate utterances by Republican candidate Mitt Romney. The most damaging of all was an hour-long video of him speaking at a private fundraiser, which came on the heels of misspoken comments about recent foreign policy.
You’ve probably heard the highlights in the news already, but if you’re interested in seeing the video in its entirety, you can view it (and a full transcription) at the links below.
[CLICK HERE to view “Full Secret Video of Private Romney Fundraiser” at MotherJones.com, September 18, 2012.]
[CLICK HERE to read “Full Transcript of the Mitt Romney Secret Video,” at MotherJones.com, September 19, 2012.]
Is It True About the 47 Percent?
Yes, apparently the statistic Romney quoted in the video is true: 46.4 percent of American households did not pay federal income taxes for the 2011 tax year. But as we’ve heard from various analysts since the release of the video, that number appears a lot less dramatic in context.
According to the Tax Policy Center of the Urban Institute and Brookings Institution (comprised of nationally recognized experts in tax, budget, and social policy who have served at the highest levels of government), nearly two-thirds of those households did have payroll taxes taken out of their paychecks, which is the tax used to fund entitlement programs such as Social Security and Medicare. Among the remaining 18.1 percent that did not pay any taxes–payroll or otherwise–just over 10 percent were elderly.
[CLICK HERE to read “Mitt Romney’s 47 Percent: Doing the Math,” at the Harvard Business Review Blog Network, September 18, 2012.]
[CLICK HERE to view analysis of “Who Doesn’t Pay Federal Taxes?” at the Tax Policy Center, 2012.]
[CLICK HERE to read, “Half avoid taxes, get U.S. help, but many not poor,” at Associated Press, September 18, 2012.]
In a recent report from National Public Radio (NPR), congressional correspondent David Welna pointed out that in 2009, half a dozen of the nation’s 400 wealthiest households also paid no federal income taxes thanks to tax breaks for investment losses. Furthermore, he points out that the biggest reason why so many households pay no federal income tax is due to the earned-income tax credit (EIC)–a subsidy for low-wage workers–which was enacted by Congress in 1975 (during President Ford’s term).
President Reagan further expanded the EIC as part of the 1986 Tax Reform Act, stating that “Millions of working poor will be dropped from the tax rolls altogether.” President Clinton also expanded the EIC during his administration, and then President George W. Bush initiated the child tax credit–which raised the percentage of Americans who paid no federal income tax to 36 percent by the end of his presidency.
[CLICK HERE to read/listen to the NPR report, “Why Some Are Exempt From Federal Income Taxes,” at National Public Radio, September 19, 2012.]
Perhaps less focus should be on Romney’s comments about the 47 percent of Americans not paying taxes and more on his point that people “should take personal responsibility and care for their lives.” While taxes are designed to help pay for programs like Social Security and Medicare, they were never designed to provide for 100 percent of a retiree’s income or health care expenses. That’s where the importance of independence–versus being “dependent on government”–comes into play.
And that’s where we can help. We can offer you strategies that may help cover a greater portion of your income and medical expenses in retirement, based on your specific needs and financial situation. Contact us to find out more.
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Source: Woods Blog Old