Does income tax punish the rich?
Mitt Romney is not like those of us normal people living in Fairfield, California. For one thing, he made $23 million in 2010 and for another he paid only 13.9% in federal income taxes. Right-wing apologists often complain that the top 50% of American income earners pay almost all of the income tax collected and that progressive taxation on income is punitive taxation. Well, there's more to our tax story than just income tax.
Mitt Romney is not alone in his exceptionally low "rich-man's" tax bracket. According to the U.S. Department of Commerce, Bureau of Economic Analysis, total personal income in the United States is about $13 trillion and Mitt Romney's group, the top 0.1%, takes home 10.4% of that, about $1.4 trillion. These top 0.1% income earners paid about $170 billion in federal income tax for an average tax rate of about 12%. I don't consider 12% to be punitive taxation, especially when the average Fairfielder is in the 25% tax bracket. But that's just the beginning of the discrepancy.
We regular folks living here in Fairfield, the other 99.9% of America, have to pay for our Medicare and Social Security too. That's another 7.65% of our income that's taxed, no matter how puny your paycheck. Mitt Romney's income was mostly from interest, not wages, so his combined Social Security and Medicare tax rate was 0.1%. Also, we Fairfielders pay a 7.375% sales tax whenever we buy anything. Oh, Mitt Romney pays a sales tax too, but the difference is that we Fairfielders spend a much larger percentage of our income on things we need than does Romney, and therefore, we pay a much larger percentage of our income in sales tax than he does.
I still haven't mentioned the most regressive tax of all, inflation. Inflation hits us all, but it hurts the poorest among us most. When prices go up, most of us just grumble and pay more, but the working poor and those on fixed incomes may not have that option. One in seven Fairfield residents live in poverty and most of those are children and elderly. What do their choices look like?
The last three Republican administrations, Ronald Reagan, George Bush I, and George Bush II, dramatically increased our national debt. Why? Because when your government borrows money, they don't have to raise it by taxation. As an added bonus, the resulting inflation actually benefits the rich by increasing the value of, and income from, their properties, raw materials, and manufactured goods and they can effectively reposition assets out of cash and bonds and into real estate, stocks and commodities. If you are working poor, struggling, or are retired on a fixed income, you suffer as the world around you costs more and more and more. In your world, your "assets" on the couch in front of the TV and the only adjustment you can make is to your belt.
Listen to the rhetoric coming from the rich, their media spokesmen, and Republican politicians. They only talk about cutting income tax, corporate tax, dividend tax, and tax on interest payments, affecting the wealthy; never about the regressive taxes we normal people pay every day. Consider this: If Republican Paul Ryan's tax proposals are passed, Mitt Romney's income tax rate would drop to almost zero. Who picks up the tab? The 99.9% of us living in Fairfields all across this nation. But even now, that minimum-wage, non-benefitted gal handing you your hamburger probably pays a greater percentage of her wages in taxes than Mitt Romney. So don't cry about the rich paying too much in taxes; save your sympathy for the poor.
Mike Kirchubel writes a weekly political/economic column for the Fairfield, California Daily Republic newspaper and is the author of Vile Acts of Evil, the hidden history of banking in America.