The Reality of Taxation in Low Income Families

I am constantly irked by the mantra that “poor people don’t pay takes” since “almost half of all Americans don’t pay income tax”, a misleading bunch of bologna that is almost always followed up by lamentations of how unfair this is to the wealthier Americans. This needs some reality, stat.

First, notice how careful talking heads are to say income tax? Income taxes are only levied on people whose income is sufficient to be taxed. That means if you are a family of four squeaking by on peanuts has no surplus wages after basic needs to get taxed. So while the oligarchs sniveling that the top 20% of earners in the US pay 84% of the income tax is correct, it leaves out the fact that that’s because income tax only starts when you head into the more-than-sufficient range and that the top 20% of Americans own 89% of the total WEALTH. They pay less that their “fair share” of income taxes if you look at how much more income they have than the bottom 80% of Americans.

Basically, someone making 250K a year will pay more INCOME tax than someone making 30K a year. Excuse me if I don’t weep in my soup for the guy or gal making 220K more a year than the ‘free loader’ who isn’t taxed.

Furthermore, the less money you make the GREATER the percentage of tax you pay. The poor pay more – in real ouchie dollars – than the rich in federal taxes, which include payroll tax and excise tax.

taxes on poor 

The less money you make the bigger the chunk of your change is going to state taxes as well.

tax on poor 2

In short, the wealthiest 20% pay more income tax but the bottom 80% pay more of their income to taxes. Worse, wealth inequality – the separation of the haves from the have-nots – is worse now than it was during the Civil War and the 1880s and it is worse than it was during the Great Depression.

Oh, and don’t think that the wealthiest Americans got it all through the sweat of their brow, either. Income isn’t just what people earn from work. Income also comes from dividends, interest, rents and royalties. The richer you are the less of your income is a product of a salary you got for working; “in 2008, only 19% of the income reported by the 13,480 individuals or families making over $10 million came from wages and salaries.” Basically, people making $10 million a year have 80% of their income float into their bank account without lifting a finger.

Think of that the next time someone is bemoaning the ‘unfair’ taxation of the top 20%.

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