3 Tax Truths: Who’s Carrying Who?

In addition to the “debate”  on the federal level about the wealthiest Americans and corporations getting a free ride off We the People while just about everyone else is sacrificing what little they have left, there are three huge lies that seem to stick around way longer than they should about Americans and taxes.  I’ll put all three to bed right now with three simple facts:

  • Tax cuts for the rich are job killers (as evidenced by these links);
  • Many lower income families pay a lot of tax; and
  • The rich pay a lower percentage of their income in state taxes (at least here in NJ but also in many states) than everyone else.

It is these last two items that have really been in the forefront lately and a lot is based on the completely farcical selective focus on personal income tax.  The excuses and “proof” is laughable – that more money is paid by the top 5% (duh, they have 90% of the total income and wealth), that lower income Americans don’t pay federal or state income tax or whatever else.  But of course, that doesn’t take into account the following:

  • Property tax
  • Social Security tax
  • Medicare tax
  • Sales tax
  • Cigarette tax
  • Hotel tax
  • Non “tax” taxes such as tolls, ATM fees, parking or meter fees, etc.

Even taking the last few out of the mix, a recent 50 state study showed that in almost all states, the top 1% and 5% pay a lower share of their income in taxes, and the lowest 20% paid a substantially higher percentage of income in overall taxes – even when the income taxes are taken out of the equation.  

Here in NJ, just taking sales, property and income taxes, the lowest 20% pay almost 11% of their income in state tax, while the top 1% (with an average 2007 income in excess of $2,250,000) paid under 7.5% of their income in state taxes.  This is the lowest of any bracket (lowest 20%, next 20%, next 20%, next 20%, next 15%, next 4%, top 1%) and substantially lower than nearly all of the other brackets.

Couple this with the debunked lie that Governor Christie and his right wing ilk like to repeat about taxes and the little to no impact they have on people leaving a state, and you have those poor mistreated, misunderstood and unfairly picked on super rich crying about stuff that is a steaming pile of thousand dollar bills lining their pockets at the rest of our expense.

Comment (1)

  1. Bill Orr

    Compounding the tax problems of those who are not wealthy is new data from Pew Research Center “which finds that, in percentage terms, the bursting of the housing market bubble in 2006 and the recession that followed from late 2007 to mid-2009 took a far greater toll on the wealth of minorities than whites. From 2005 to 2009, inflation-adjusted median wealth fell by 66% among Hispanic households and 53% among black households, compared with just 16% among white households.”

    For those of any race or ethnicity who are not wealthy, a decrease in their home value not only reduces their net worth but leaves them more vulnerable to foreclosure, less likely to be able to borrow money, and have more difficulty in moving to some other area where a job may be available. According to Pew, median home prices in NJ between 2005 and 2009 dropped 16%, but the total impact of the Great Recession has been even more severe. The wealthy can often cope, those who are not wealthy not so much.  

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