Do we know the best way to explain it: Forty-seven percent of households pay no federal income tax.
Absent careful explanation, that’s a politically dangerous fact.
Who are the 47 percent? Why don’t they pay federal income tax? There are quite a few bad or dangerous ways to answer that question.
One bad way to answer that question is to say things which are false. Eliot Spitzer took that approach at Slate:
SPITZER (9/20/12): But as I have been saying for some time now, the 47 percent figure, while technically accurate as it relates to federal income taxes, doesn't include what people do pay through the payroll tax, sales taxes, excise taxes, and all sorts of other levies. So here is a partial breakdown of how those other burdens fall on the population, courtesy of the Tax Policy Center and the Institute on Taxation and Economic Policy:Spitzer’s breakdown is fuzzy from the start. The highlighted statement is massively wrong, as you can see from the very clear presentation to which he links.
28.3 percent pay payroll taxes, which cover Social Security and Medicare.
10.3 percent pay no federal income tax because they are retired or elderly, and Social Security payments are not taxed. I can't imagine that Romney objects to this category.
It turns out that just 6.9 percent of people who are non-elderly don't pay income tax. That is a far cry from 47 percent. We are not, in fact, a nation of moochers, as Romney seems to suggest.
Another bad way to answer that question is to get lost in the weeds. Explainers should be especially careful if they’re on TV, where people can’t reread their statements.
On the NewsHour, Roberton Williams and Gwen Ifill were quickly off in some very high grass. Williams lost us right after hello, and things went downhill from there.
Ifill provided no help:
IFILL (9/18/12): So who do we think these people really are? We saw how Judy broke down some of it. But beyond that, are these people who honestly are not paying anything in taxes, or they’re just not paying in income taxes?Williams was fuzzy right out of the gate. If you already understand the facts, you can decipher what he meant in that fuzzy and fumbled first response.
WILLIAMS: The story is half-true. It’s true about the income tax, but it doesn`t address the other taxes people might pay.
Of these people, 40 percent–I’m sorry, 60 percent of them pay payroll taxes because they’re working. They pay the taxes that support Social Security and Medicare. They’re likely to pay state sales taxes, local taxes and federal excise taxes. So they’re not paying nothing at all. They’re just not paying income tax.
IFILL: And when the candidate makes the comment about dependency and he’s talking about people who are relying on government, are we talking, is that— Are they talking about Social Security, Medicare, Medicaid, tax credits, mortgage interest deductions? I don’t—you know—
WILLIAMS: It’s really hard to tell exactly what he was speaking to. He was talking about dependency. Do you mean that when we grow old and we start collecting Social Security and Medicare, is that what we’re talking about? Are we talking about TANF, the Temporary Assistance for Needy Families? Are we talking about food stamps?
We have a whole panoply of programs that help people when they need the help. If we look at the way the tax system works, we have some people, about half the people who pay no tax, just because they’re plain poor. Their incomes are so low that the standard deduction, personal exemptions zero out their taxable incomes. They would pay nothing if there were no special preferences at all.
The other half of people benefit from special preferences built into the tax system, tax credits for children. Low-income workers get the Earned Income Tax Credit. High-income people benefit greatly from low tax rates on capital gains and dividends. So, everybody throughout the income distribution benefits from the tax provisions. It's just, if you’re low- income or moderate-income, you may well be zeroed out and pushed off the tax rolls entirely.
For viewers who didn’t know the facts, Williams did a poor job articulating his key points. Before long, he was lost in the weeds. He seemed to make inaccurate statements. This included some fuzzy or inaccurate statements which are politically dangerous:
“If we look at the way the tax system works, we have some people, about half the people who pay no tax, just because they’re plain poor?”
At best, it’s hard to know what that means. At worst, it sounds like something that’s factually wrong—and politically dangerous.
“The other half of people benefit from special preferences built into the tax system?”
Sorry, we were lost by this point. Half the people are plain poor? The other half benefit too?
Williams stumbled out of the gate, quickly went to the weeds. Along the way, he was soon talking about food stamps and people who are poor, making it sound like tons of people “pay no tax, just because they’re plain poor.”
Or something. It was hard to know what he meant, and Ifill made no attempt to clarify. Our reaction: This exchange came close to what conservatives hope budget experts will say on TV. They want to hear poor-poor-poor. (To watch the tape, just click here.)
Forty-seven percent of households pay no federal income tax. That’s a politically dangerous fact.
Do we know how to discuss and explain that fact? More on this topic to come.
This just in from your lizard: Your lizard brain may be getting angry. But they’re on our side, your lizard may say.
Our reaction to that: So what? Please learn to handle your lizard!