How dare Mitt Romney feed the right-wing lie that 47% of Americans are moochers who don't pay any taxes! We all pay taxes, even those too poor to owe federal income taxes, and I guarantee you the pain of paying taxes hits the poor and middle class far more severely than it hits Mitt Romney and the 1%! Follow me below, and you'll see our tax system is actually quite regressive.
Federal income taxes are one of the few progressive taxes left in America, though less progressive than they used to be. State and local taxes, payroll taxes, sales and consumptions taxes and many others are regressive with respect to income.
But why do we only compare taxes to income? The ability to pay taxes without feeling it comes from wealth as much as or more than from income, and wealth is far more unequal in our nation than income. Take a look at the numbers below comparing taxes with wealth--the results are shocking!
Estimated 2010 Average Total Taxes Paid in U.S. by Quintile:
Average Income Average Wealth Total Taxes % of Income % of Wealth
Bottom 20% $12,500 $0 $2,000 16.2% infinite
Second 20% $25,300 $5,000 $5,200 20.7% 104%
Middle 20% $40,700 $102,000 $10,200 25.1% 10%
Fourth 20% $66,300 $274,000 $18,900 28.5% 6.9%
Next 19% $140,000 $1,300,000 $43,100 30.8% 3.3%
Top 1% $1,254,000 $17,600,000 $376,200 30.0% 2.1%
Mitt Romney $21,700,000 $230,000,000+ $3,000,000+ 14+% under 2%
The bottom 40% of Americans pay more in taxes than their entire net worth every year, while Romney and the 1% pay only about 2% of their wealth in total taxes. Compared to wealth, our tax system is highly regressive. These are the numbers that Mitt Romney and the GOP do NOT want you to see!
These figures are total taxes, federal, state and local, including income, estate, corporate, payroll, sales, property, and other taxes.
Tax and income estimates are based on data from Citizens for Tax Justice.
Wealth distribution figures are derived from the 2011 Norton and Ariely study that found wealth inequality is much greater than most Americans think it is, and far greater than they say it ought to be (even according to Republicans!). The Norton and Ariely study attributed 0.1% of total wealth to the bottom 20%, but other sources suggest there is on average no or negative net worth at this level, so zero is a fair estimate there. I also used estimates of about $57 trillion in total private wealth of U.S. households (probably higher now), and an estimate of about 113 million households.
For Mitt Romney, I used the figures he released for 2010 and Forbes estimates of his wealth (not including $100,000,000 in trust funds for his sons, and who knows what wealth he may be hiding). He has probably paid more taxes in other forms than this, but it would be a total guess for me to estimate them. I will note, however, that when he says he paid at least 13% taxes in prior years, he never says "income taxes", so he may be estimating total taxes of all kinds.
One assumption in this table is that most people are in the same quintiles for both income and wealth. To the extent this is not true, it only means that those at the top of the wealth ladder have lower average incomes and pay even less in taxes, while those on the lower rungs pay more in taxes relative to their wealth. So the real disparity is probably even greater than what this table indicates.
All of these numbers are estimates, and I welcome anyone with better numbers. Averages vary by state and locality, but the basic picture is clear. When all taxes are included, our overall tax system is barely progressive with respect to income (and regressive at the top end). It is highly regressive if wealth is taken into account. Taking into account both wealth and income, do you think the taxes paid by the bottom 20% or the top 1% has a greater effect on their quality of life?
Don't forget, if the Ryan/Romney plan were implemented (including no capital gains taxes, etc.), Romney's federal income tax would fall to almost nothing, while ending many tax deductions would raise taxes on the middle class. Economic disaster and needless suffering would be the result.
We need more progressive taxation (including a stronger estate tax) for the health of our economy, for survival of the poor, for fairness to the middle class, for prevention of an entitled aristocracy of wealth, for democracy and opportunity, for investment in the future, and ultimately for a system that works for everyone, even the 1%.