I woke Saturday to Tara the Antisocial Social Worker's rant of the fantastically righteous variety. I love this stuff. Giving context to the claims of the Republicans and conservatives is vitally important. As is pointing out the dishonesty in the way this talking point is framed.
At the very moment I found Tara's diary, the Front Page had Laura's piece about the Heritage Foundation misusing statistics in their claim about how great life is when you live in poverty.
And it occurred to me...this '50 percent' thing has never passed my smell test. Could conservatives and Republicans be repeating a false reading of a statistic and the zombie media uncritically repeating the falsehood? Do baby's make poopy diapers? Yes, of course the claim is factually deficient at best and more likely a deliberate misrepresentation, and of course the zombie media is not taking a critical look.
The problem with both lines of defense that we tend to make in this argument is they both accept what Republicans and conservatives say as having a modicum of truth. What's good about both is they try to lend some context, but they don't give the complete context or put numbers to that context.
Please follow along as I blow up that '50 percent' myth, smack down the media while doing their jobs for them, and put some numbers to the points Tara was making.
Update: Thanks for the rec list folks. If you dig this diary, please do what I implored in my immediate previous diary and pay Robert Greenwald some attention.
The cliff notes version:
Even in the worst year of 'people not paying taxes,' approximately 40 percent of households don't pay federal income taxes, far short of the 50 percent claim.
In normal years, it breaks down something like this:
53.6 percent do pay taxes
23.3 percent are either young people or destitute people
10.2 percent are the elderly
4.5 percent receive tax breaks that benefit the wealthy more than the poor and middle class
8.4 percent are (for the most part) working class people and people with kids that are trying to improve their lot in life.
Fifty Percent of What?
This talking point is always stated in one of two ways. Either the way John Cornyn phrased it on the Senate floor
the fact (is) that according to the Committee on Joint Taxation, 51 percent -- that is, a majority of American households -- paid no income tax in 2009.
or the way Rick Warren phrased in his tweet
HALF of America pays NO taxes.
Half of All Households?
So let's look at Cornyn's claim first. What do you think when you hear the term "households?" Chances are you think of something similar to how the U.S. Census (at page 104) defines "Household"
A household consists of all the persons who occupy a house, an apartment, or other group of rooms, or a room, which constitutes a housing unit. A group of rooms or a single room is regarded as a housing unit when it is occupied as separate living quarters; that is, when the occupants do not live and eat with any other person in the structure, and when there is direct access from the outside or through a common hall. The count of households excludes persons living in group quarters, such as rooming houses, military barracks, and institutions. Inmates of institutions (mental hospitals, rest homes, correctional institutions, etc.) are not included in the survey.
In other words, a single person, couple, or group of people (extended/unextended; married/unmarried) living in a defined housing unit. How many households are there in the United States in 2009? About 117.5 million. That seems to make sense, right? About 2.6 people per household times 117.5 million equals 305.5 million, about what the U.S. population actually was in 2009.
And what does it conjure in your mind when someone says 'half of all households don't pay federal income taxes?' I'm willing to speculate that most people think half of the houses and apartments in the country are occupied by a single person, couple, or group of people pay no federal income taxes between them. Wrong. Not even close.
Nobody who studies this issue measures how many "households" do or do not pay taxes. What they measure is whether a "taxing unit" does or does not pay taxes. For instance, Cornyn was basing his statement on a Letter to Congress from the Joint Committee on Taxation. They estimated that there were 164.4 million "taxing units" in the United States. Admittedly the entities who compile this data are often guilty themselves of conflating 'households' with 'taxing units.'
So, how does the Joint Committee on taxation define a "taxing unit" when there were only 140.5 million individual tax returns filed in 2009. Presumably they combine the number of individual tax returns with the number of individual tax returns they think should have or could have been filed. (The fact that this entire conservative/media meme rests on a single Letter to Congress that is completely based on estimates and the background information upon which said Letter is based is not released to the media or public is an entirely different rant, but something you should be aware of).
Now I'm going to ask you to assume something, but it's a pretty safe assumption. I'm going to ask you to presume that the vast majority of "taxing units" that had a positive tax liability in 2009 occupied a household that contained no other taxing units that paid federal income taxes.
Sure, there's probably a good chunk of Singles and Heads of Households who pay federal income taxes who live together, but the vast majority of Married (Joint and Separate filers) occupy separate housing units. So let's try to figure out how many filers who paid income taxes occupy houses without other filers who owed taxes.
Number who paid fed inc taxes x estimated percentage living without other people who paid fed inc taxes = approximate number of households with at least one tax payer.
Single - 37.8 x 85% = 32.1 million households with a tax payer
Head of household - 5.3 million x 85% = 4.5 million households with a tax payer
Married - 37.1 million x 95% = 35.2 million households with a tax payer
Add them up and you get approximately 71.8 million households with at least one person who paid federal income taxes. Divide by total number of households - 71.8 million / 117.5 million = 61% of all households have at least one taxpayer with positive federal income tax liability. 39% do not, and I request you to remember that number.
So let's look at this in reverse. Half of 117.5 million households is 58.8 million households. 80.2 million "tax units" paid federal income taxes. So in order for half of all households to pay no federal income tax, 21.4 million "taxing units" must live with other "taxing units" that also pay federal income taxes. Seem absurd? That's because the claim that half of all households pay no federal income taxes is absurd. And the media should find the claim facially absurd as well, but they don't bother looking into it, much less recognize the absurdity.
Here's the problem...a large portion of "tax units" live with other "tax units" and it's a pretty safe assumption that most of those combinations are not "tax units" that pay federal income taxes living with other "tax units" that pay federal income taxes. Thirty percent of all "taxing units" that have enough income to result in a positive federal income tax liability live with other "taxing units" that also have enough income to have a positive federal income tax liability? I don't think so.
Slacker 22 year old pulling bong hits and playing X-box all day living in the basement of his parents suburban home - one "household," two "taxing units."
Elderly grandma and her spinster sister sharing a condo - one "household," two "taxing units."
Four Masters students sharing a flat - one "household," four "taxing units."
Family with live in grandma who also takes in brother-in-law who lost his job due to bad economy - one "household," three "taxing units."
We can see how this plays out when looking a bit at the other entity that studies the topic of 'who doesn't pay federal income taxes,' the Tax Policy Center. For instance, in a 2009 estimate the Tax Policy Center found approximately 46.9 of all 'tax units" would not pay any federal income tax, but when we look at "nondependent tax units" (presumably meaning those tax units that can't be claimed as a dependent by another tax unit) that figure dropped to 38 percent. Remember my presumption of percentages of "tax units" that pay federal income taxes having distinct households? Pretty much jibes.
Our atrocious media, and we ourselves, have let this abuse of the data to continue without even questioning it's validity. It conjures a picture of the distribution of the American tax burden that simply does not reflect reality.
Half of All People/Americans?
The second way conservatives and Republicans like to frame the data is by stating 'half of all Americans don't pay federal income taxes.' This claim is just as dubious as the claim of half 'households.'
In fact, far fewer than half of all Americans pay federal income taxes. Let's see, 37.8 singles, 5.3 H of H, 37.1 Married (times two equals 74.2) = 117.3 million Americans pay federal income taxes. About 305 million Americans in 2009 = only 38.5% of all Americans pay taxes.
But they don't say that, do they? They don't say that because it wouldn't pass the smell test. If the conservatives and Republicans put it that way, the media might actually start asking questions. They would immediately recognize the conservatives and Republicans are trying misreading the data and start asking questions about children, and old people, and perhaps even the poor.
Conservatives and Republicans don't want that. So they use a proxy to conjure the image that half of Americans are freeloading on the other half. The media's gut tells them that seems about right, so they don't ask any questions.
A Word on PolitiFact and Marth Hamilton
I'm sure most of you remember the standard to which PolitiFact, and it's editor Martha Hamilton, held a tv comedian to when said comedian used an obvious bit of hyperbole in an off the cuff exchange with an ideologue.
For those who don't remember, Politifact and Ms. Hamilton created their own definition as to what Jon Stewart meant by "misinformed" and gave zero leeway as to the term "every."
In short, they changed Stewart's statement from a way to express that Fox viewers are most consistently wrong about important issues of the day, which is undoubtedly true, and analyzed his statement as if he said
Whose viewers are able to best answer trivia questions?
while taking his use of the word "every" hyper literally.
Let's see how Politifact and its editor Martha Hamilton analyzes an error by a United States Senator speaking from a prepared statement on the Senate Floor.
The JCT found that for tax year 2009, roughly 22 percent of "tax units" (not exactly "households," but we’ll give Cornyn a pass on the terminology) ended up without any tax liability.
Ms. Hamilton...a word. Do your job. I just showed how there is a vast difference between "household" and "tax unit." You get paid to inform the American public about the veracity of statements made by public figures, yet here you give Cornyn "a pass" but not Jon Stewart? You get paid to NOT 'give Cornyn a pass.' You get paid to get to the truth behind these statements. You get paid to lend a critical eye to things Senators say on the Senate floor.
Something is seriously wrong when you create false frames and split hairs to show Stewarts' statement to be false, then put absolutely ZERO effort into determining the accuracy as to what Jon Cornyn says on the floor of the United States Senate. The document you link says "164.4 million tax units." It's common knowledge that the average household in the United States has about 2.6 people and there are about 300 million people in this country. This didn't raise your suspicions at all? Even after recognizing there was a discrepancy? Wake up Ms. Hamilton, and start casting the same critical eye toward Republican Senators that you give to comedians.
So Who Are These "Taxing Units" That Don't Pay Federal Income Taxes
A bit of an admission. The media deserves a couple of breaks. First, many reports on this 'half of tax payers' meme do point out that we are in all time high of household/taxpayers (never 'tax units' but I digress) that don't pay federal income taxes due to the economic downturn.
Second, the media deserves some leeway for their conflating "tax unit" with "household." When speaking about taxes, it is natural to speak in terms of households or filers. Thus, when the two primary entities that conduct 'who doesn't pay taxes' conflates one term or another with "tax unit," it's understandable that our lazy, stenographic media just repeats what the alleged experts have to say about it.
As an aside, Politifact and Ms. Hamilton don't deserve ANY leeway because they are explicitly in the business of looking into things like this and not 'giving them a pass.' They're not supposed to be just playing stenographer. They're supposed to look into the statements and analyze them, not selectively 'give a pass' when 'giving a pass' completely changes whether or not a statement is true or false.
As I noted above, the Joint Committee on Taxation didn't release much more than a letter without any background data. The Tax Policy Center in the past has done the same, issue a chart or a graph and maybe one page of explanation. But that's not the case right now, and what is inexcusable is the media's failure to give context to this discussion now that a more detailed analysis of who does not pay federal taxes is available.
Three weeks ago The Tax Policy Center released a report entitled Why Some Tax Units Pay No Income Tax. In a culture with a functional media, we would have heard much of what this report has to say after the breathless "50 percent of households" reporting we've been subjected to over the past few months.
46.4 percent of 'tax units' don't pay taxes
A quick caveat, this analysis is based on estimates for 2011, not 2009 which was the point of discussion up until this point. The first thing to note is their estimate for how many 'tax units' won't pay income tax is already down from 50.8 percent in 2009 to 46.4 percent in 2011.
Another interesting factoid is that approximately 433,000 tax units have incomes over $100K per year and pay no federal income tax, and that this number would be higher if the Tax Policy Center didn't decide to exclude from that number those paying income taxes to foreign governments but not the United State government.
To understand the report, you need a quick background in what the IRS and tax analysts consider 'standard' and what is considered a 'tax break.' Congresses past, in their grand generosity, decided that Americans should not be taxed on the portion of their income that is estimated to be necessary to supply a minimal amount of basic human necessities. They created two tax mechanisms to make this happen, the exemptions and the standard (not itemized) deduction.
23.3 percent of 'tax units' are kids and or don't have a pot to piss in
According to the Tax Policy Center, HALF (50.2 percent) of those who don't pay income taxes would not pay even if you stripped every 'tax break' out of the system and left only exemptions and standard deductions. In other words, 23.3 percent of the tax units pays no income taxes because they make so little money they couldn't even afford to pay for basic human existence (a quick note: I'm sure a sizable percentage of those folks are people who are dependent on other 'tax units' that do pay federal taxes).
10.2 percent of 'tax units' are old folks who don't pay taxes, most of whom don't have a pot to piss in
So let's look at the other half (actually 49.8%) of people who don't pay federal taxes. They don't pay because of one or a combination of what the IRS and tax analysts consider 'tax breaks,' referred to in the report as "Tax Expenditure Provisions."
Forty four percent of those who pay no federal taxes due to "tax breaks" are seniors. In other words, 10.2 percent of the tax units pay no federal income tax because of the increased standard deduction for the elderly, exemption of a portion of SS retirement from income tax, and the tax credit for the elderly. It should be noted that 90.7 percent of these folks have incomes below $40K per year, and 54.9 percent of them have incomes under $20K.
4.5 percent of 'tax units' don't pay taxes due to 'tax breaks' that Republicans most likely won't ever repeal because they benefit the wealthy'
Another large subset of people who don't pay federal income tax due to 'tax breaks' are those who enjoy what are, for the most part, middle class tax breaks. Above the line deductions/exclusions, itemized deductions, education credits, misc. credits, and reduced rate for capital gains and dividends account for 19.6% of those pushed into "no tax" territory by one or more 'tax breaks.'
So 4.5 percent of the population doesn't pay federal income tax because of 'tax breaks' that benefit the middle class...and also happen to be tremendous benefits to the wealthy elite. Good luck getting them on board in changing mortgage interest deduction, local and property tax deductions, medical expense deductions, bond interest exclusion, special rate on cap gains and dividends, and self employment tax deductions there Orrin.
8.4 percent of 'tax units' are working class folks and people with kids that are working hard
So with that we are left with the heart of the matter. What conservatives and Republicans really have a problem with: refundable tax credits and not taxing SSI/TANF/Workers Comp/Disability/Energy Assistance. And this should be obvious to us. The Republican crusade to tax your bar tender and waitresses tips should have been a dead giveaway to every American that Republicans really aren't interested in low taxes. They're interested in low taxes for the wealthy elite. Their SSI tax holiday position is only the latest reminder of that.
And the thing is, these people aren't driftless slack abouts. The very low income people don't get these credits. From the report:
Nontaxable units with incomes below $20,000 or above $100,000 will more likely owe no tax than have negative income tax liabilities.
People who don't pay taxes because of these two 'tax breaks' account for 36.4 percent of those who pay no federal taxes because of tax breaks. That's 10.7 percent of the tax units. And why are Republicans after these 'tax breaks?' Because these 'tax breaks' are an end around Republican intransigence when it comes to helping the working class improve their lot in life.
What the Republicans are really after
Republicans use, and be fearful if Obama adopts, the term "expanding the tax base." This is code. What it means is one or more of: taxing the young and destitute, taxing more Social Security benefits and at a higher rate, taxing TANF/disability/workers compensation, and eliminating the Earned Income Credit and Child Tax Credits. And if the Republicans think $800 billion is a pittance, just wait until they try to close the budget deficit by making those who can least afford it pay more.