orangeleader.com (Orange, Texas)

September 24, 2012

Separating Fact from Fiction: Who Doesn't Pay Taxes?

Special to The Leader
The Orange Leader

AUSTIN, Texas — The question of who actually pays taxes - and who does not - has emerged as an election-season talking point. A new report from a nonpartisan think-tank aims to separate fact from fiction. 



Chuck Marr, director of federal tax policy for the Center on Budget and Policy Priorities (CBPP), co-authored the report, released last week. He says one of the biggest misconceptions is that about half of Americans, 47 percent, do not pay taxes. 



"We're talking here about federal income taxes. Working-class and middle-class people do pay federal payroll taxes for Social Security and Medicare. In fact, most people pay more in payroll taxes than in income taxes."



Local taxes and sales taxes are also part of the equation. While Texas is one of just seven states with no income tax, low- and moderate-income families bear a disproportionate share of the overall tax burden, according to analysis by the Austin-based Center for Public Policy Priorities (CPPP), which ranks Texas as fifth-least fair nationally. The analysis concludes that recent property-tax reductions will likely lead to further redistribution of wealth upward, as less-fair taxes, such as sales and gas taxes, take up the slack.



Marr rejects the notion that 47 percent of Americans are not doing their fair share.



"They get up every day, they go to work, they work hard. They work in nursing homes and take care of elderly people; they are school aides; they work in all of our stores. They're working hard and are very much contributing to society."



According to the CBPP report, when considering all forms of taxes, the bottom 20 percent of American households pay an average of 16 to 17 percent of their income in taxes. The people who do not pay federal income tax or payroll tax generally are low-income seniors, people with serious disabilities, or students - most of whom become future taxpayers. In the case of seniors, they likely paid federal income taxes during their working years.