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The Surprising Facts About Mitt Romney's 47% Who Pay No Income Tax

Mitt RomneyFor weeks, Mitt Romney's campaign has struggled to explain the candidate's refusal to release concrete details about his proposed tax reforms or budget cuts. On Monday, however, Romney managed to escape from the continuing attacks over his economic policy; unfortunately, he did so by unleashing a potentially more damaging firestorm over his attack on Americans who don't pay federal income tax.

In May, Romney attended a fundraiser hosted by Marc J. Leder, a Florida-based private equity manager. At the party, which was secretly videotaped, the former governor explained the opposition that he faces among the voting public:

There are 47% of the people who will vote for the president no matter what. All right, there are 47% who are with him, who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it. That that's an entitlement ... And they will vote for this president no matter what ... These are people who pay no income tax ... My job is not to worry about those people. I'll never convince them they should take personal responsibility and care for their lives.

The fabled 47% who don't pay income taxes are a favorite talking point for many conservative pundits and politicians, who often use them as evidence that America's expenses are paid by a relatively small portion of the populace, while the rest -- in Romney's words -- don't "take personal responsibility" for themselves.

What gets lost in the discussion is a real consideration of who these people actually are, how and where they live, and why they are exempt from that particular tax. The answers to these questions help explain a large part of the disconnect between the Democrats and the Republicans -- and the ideological differences underlying the current presidential campaign.

Who Are the 47%?

According to the nonpartisan Tax Policy Center, 53.6% of Americans pay a portion of their income in federal income taxes, and 46.4% don't. Of those who don't, 61% (28.3% of the population) pay payroll taxes, such as Social Security and Medicare, but have enough deductions and tax credits that their federal income tax liability has shrunk to zero. In other words, 81.9% of the population is gainfully employed and sends some measure of their income to the federal government.

The 47% that don't pay taxes

As for the rest, 10.3% of the population -- 22% of non-income tax payers -- are elderly and are likely unemployed, i.e., retired. A further 6.9% are non-elderly but have incomes below $20,000, which in most cases puts them below the poverty line.

For that matter, it's not as if the rest of the 47% -- or, actually, 46% -- are doing especially well. Nearly 90% of the group consists of households making less than $50,000 per year, and 80% make less than $30,000. The remainder is mostly composed of higher-income households that benefit from significant tax credits for children and education.

This isn't to say that everyone who doesn't pay taxes is struggling. About 162,000 people among the top 10% of earners have found ways to avoid paying any federal income tax. This includes approximately 3,000 people in the top 0.1%, a group that makes $2,178,886 per year or more. A large part of their low tax rate, The New York Times' Bruce Bartlett suggested, lies in the fact that many -- like Romney -- derive most of their income from capital gains, which are only taxed at 15%. To further cut their liability, many are able to offset their taxes because of losses that they took in previous years. Alternately, some invest in tax-free municipal bonds or take advantage of a slew of other tax loopholes.

Why Do the 47% Get Such a Great Deal?

 Tax Policy CenterRegardless of whether or not all the accusations leveled at the 47% are true, it seems strange that so many households get such a big break on their federal income taxes that what they owe to Washington falls to zero. It's worth noting, though, that even this "untaxed" segment of the country isn't getting a free ride.

To begin with, when it comes to state taxes, every state in the union puts a larger burden on the poor than on the rich. Even states that don't charge income tax, like Washington, for example, place a large burden on their poor citizens, as they tend to make up for the lack of income taxes with steep sales and excise taxes -- regressive levies that fall especially hard on the poor.

Ultimately, the combination of state and federal taxes evens out: When Citizens for Tax Justice, a nonprofit advocacy group, analyzed the total tax burden on each income level in the country, they discovered that the percentage of total wages that each group gets is almost equal to the percentage of total tax revenue that they contribute. In other words, the wealthiest Americans pay most of the country's taxes, but also get most of its income.

wealthy percentage of taxes

This shared burden is particularly important when one considers how the 47% managed to avoid their taxes in the first place. The answer is, to a large extent, Republican tax cuts under Ronald Reagan and George W. Bush's presidency.

As Ezra Klein explains in The Washington Post, many tax cuts for the poor were enacted to make tax cuts for the rich "more politically palatable." Certainly, the tax breaks passed into law in Reagan's second term and Bush's tenure were accompanied by big jumps in the number of households that were exempted from paying taxes. In Reagan's last few years in office, the percentage of households not paying taxes jumped by more than 10%. Under Bush, it increased by more than 25%. Under the circumstances, it's ironic that the Republican candidate for president is now so quick to demonize a group that his predecessors so massively expanded.

Where Do the 47% Live?

The fact that Romney's party largely created the 47% isn't the only irony in his attacks. Perhaps more striking is the fact that an outsized percentage of the 47% live in "red states." Of the 10 states with the highest percentage of income tax nonpayers, only one -- New Mexico -- is leaning toward Obama right now. Meanwhile, of the 10 states with the lowest percentage of income tax nonpayers, only two -- North Dakota and Wyoming -- skew right.

And therein lies perhaps the strangest aspect of Romney's complaint. Not only does he not seem to understand the group that he's discussing or the way that it was created, but his final statement, that "these are people who pay no income tax ... My job is not to worry about those people," directly contradicts the electoral map. The choir that he's preaching to actually contains a large percentage of the very people that he just wrote off.

Taxes by State

Bruce Watson is a senior features writer for DailyFinance. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at @bruce1971.

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Sad comments from 2012 . Think they would be written differently if posted now...Except the ones who get news from Fox.. They should really try listening to NPR

January 18 2015 at 1:31 AM Report abuse rate up rate down Reply

Great article,
A reverse mortgage is a loan that enables senior homeowners, ages 62 and older to convert part of their home equity into tax-free income . Thanks for share this .


June 15 2013 at 2:02 AM Report abuse rate up rate down Reply

I am amazed to see and expect such ridiculous comments. The article did not clarify enough.The last few elections have been such a joke. The nature of the situation is that of win win win at all costs who cares what the actual truth is. Make distortions if possible to gain advantage by pretending to care. Some people want the truth most apparently don't know or care; without really thinking about what they are doing. A so called flip flop implies one can not change a viewpoint once made regardless of further reasons that might arise therefore you are lost and therefore no good. What does a person do when they see something that would otherwise add a different light, realize a new perspective or need adjustment. Pointing the finger tends to distort or actually makes one have to think a bit and how that hurts. I did not know Romney and was very hesitant toward him though the more I heard him the more I liked him. The more I heard Obama the more I realized what a pathetic miserable lying con, sham, game player he was and is; such a smooth talker he could for example steal your purse/wallet and if you realized or wondered and questioned it even though he had in his hands like a smooth talking attorney (oh yes he's that too) he could make you feel guilty and even question your beliefs,values and motives and have you feeling you are to be happy to allow me to do whatever I feel necessary because I am so wonderful. Like people in denial just can not see to looming danger. When the danger, hurricane, situation comes you can wonder what happened though that does not change anything. You can complain about and blame people that you don't like or understand and make excuses for those that you do like or mesmerized by. Besides the ability to control people in crazy ways does exist. If nothing else can rationalize it with in interest of national security.
Kennedy and Bush Admin. plans where invasion or assassination or setup was considered was out of the question or highly questionable. Though times change With the backing of apparently UN, other countries and who cares I have decided Obama can sit with his people and watch as his willful invasion of a country although we are not at war took place and willfully kill an unarmed person in the name of a good deed for the world; hardly. He should be tried for treason among others. Adds trillions to the deficit. Pushes his green plan although all advisors said no though he insisted got his way backed by the govt. which went under at 500+ billion; taxpayers responsible no big deal. Force a health care program as a tax, known to not work well in England and Canada and does not address the real needs. This country has become a joke.Obama's appointed VA director is screwing over disabled Amer. royally; so what. Out of sight out of mind. No Change got Bush & Obama re-elected. Changed got Obama elected. People/Veterans/Country looses. Be happy idiots even when things get worse. we are not a free country so sad

November 09 2012 at 1:16 PM Report abuse rate up rate down Reply

This article misses the point. 47%, 40%, 35% -- whatever the percentage is. The real point is that there is a huge chunk of the population that expects and demands government help, that feels others should subsidize my lifestyle, that feels "the rich" have too much wealth and it should be confiscated, that feels America is no longer a level playing field.

Never mind that during the Nineties, we witnessed a vast and breathtaking expansion of wealth, with tens of thousands of new millionaires and billionaires because of economic expansion from technological change such as the World Wide Web.

Never mind that immigrants continue to flock to our shores and continue to excel over natives.

Never mind that Obama and his party have promoted an anti-business, class warfare mentality among their followers that is Lenin-esque in its ideology.

Whereas 50 years ago it could be argued that the broad middle class prevailed, today the U.S. has divided out into the makers and the takers, those who create the wealth versus those who parasitically use it.

Romney is right. Instead of shooting the messenger, we should look at how our poor education and pandering demagogue politicians are destroying the social fabric and turning us into a rich-versus-poor society like in Latin America--a society that is doomed to ultimate poverty and collapse.

The only solution is better education, the restoration of proper teaching of history and literature and the sciences at all levels of our schools, and the encouragement of business growth in every category. We have a stark choice--kill the goose that lays the golden eggs, or feed it.

October 09 2012 at 10:54 AM Report abuse rate up rate down Reply
1 reply to blisterpeanuts's comment

Couldn't agree more. "A large burden on their poor citizens" with sales tax? How do you figure that? The little red, white and blue plastic card is funded by my taxes. And all i see in the shopping carts are cookies and sodas and chips and junk I don't buy for my own family. I have no problem helping someone who needs it. We as a society have an obligation to help our neighbors. But I also believe strongly in "teach a man to fish." Every hand out does more harm than good.

October 19 2012 at 1:11 PM Report abuse rate up rate down Reply

thank you for your share!

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October 07 2012 at 3:55 AM Report abuse rate up rate down Reply

really??? He would never say those exact words in seriousness these statements are out of context. On top of the theory I present there is no reason we (Americans who pay income tax who are in debt) should have to pay for people who flat out don't pay it; whereis your Patriotism? It must be in Mexico, I think Mexicans deserve a great life but it is not America's job to give it to them! LOVE AND RESPECT! AARIN!

October 03 2012 at 12:41 AM Report abuse rate up rate down Reply

WASHINGTON, Sept 28 (Reuters) - Ann Romney told a Nevada television station her biggest concern if her husband, Republican presidential candidate Mitt Romney, becomes president was his "mental well-being."

In an interview Thursday with television station KTVN, Mrs. Romney was asked what her biggest worry was should Mitt Romney be elected to serve in the White House.

"I think my biggest concern obviously would just be for his mental well-being," she said. "I have all the confidence in the world in his ability, in his decisiveness, in his leadership skills, in his understanding of the economy. ... So for me I think it would just be the emotional part of it."

September 29 2012 at 12:51 PM Report abuse rate up rate down Reply
Melinda Kay Harger

One point that the article doesn't highlight...any single person making minimum wage at a full-time job without children or extra deductions will end up paying income tax, so this can only mean that 23% of people aren't working full-time. I find this completely unacceptable! We don't have that many disabled Americans.

September 26 2012 at 5:23 PM Report abuse rate up rate down Reply

What do you think Bruce Watson's effective Federal Income tax is?

How much do Obama propagandists get paid by HuffPuff?

HuffPuff herself is in the one-tenth of one percent ... so how much do her flunkies make?

September 25 2012 at 6:19 AM Report abuse rate up rate down Reply

I think many of us would like to see/listen to Romney debate Romney.

September 24 2012 at 10:16 PM Report abuse rate up rate down Reply