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Income tax or not, we can never fully avoid the tax bite
From levies on utilities to purchases, the tax man is with us every step of our day.
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Kai Ryssdal: Any guesses as to the Marketplace number of the day today?
Yep -- 47. The percentage of Americans paying no income taxes that Mitt Romney was caught talking about on tape. The news that broke last night has brought the tax code -- in all its local, state and federal complexities -- back into focus. Because federal or not, virtually all Americans pay plenty taxes every single day.
From Washington, Marketplace's David Gura gets us going.
David Gura: Most of us pay taxes as soon as we wake up.
Jeremy Hobson: From APM, in New York, I’m Jeremy Hobson, and this is the Marketplace Morning Report.
Thomas Cooke teaches accounting at Georgetown.
Thomas Cooke: You go to brush your teeth and use the soap. Well, all that stuff was taxed. Then, I’m driving into work and I need to get gasoline. Oh boy, that’s a heavy state tax.
Taxes are a part of my morning routine. My newspaper is taxed, and on the way to work, I go to K Street Café and Bagel.
Gura: Can I get a small coffee, please?
Cashier: Sure.
That’s on the menu for $1.65. But with D.C.’s 10 percent sales tax...
Cashier: That is $1.81.
Cooke: There is very few people out there you can flat-out say are not paying any taxes.
Thomas Cooke rattles off a list of taxes:
Cooke: There’s a federal gift tax. There’s a federal estate tax. There is a real estate tax we pay annually on our property.
And it goes on. Taxes follow me all the way to work.
Andrew Parsons: Hey, David. Good morning.
Gura: How’s it going, Andrew?
Where I’m hit with a big tax as soon as I clock in. Tax attorney Clint Stretch reminds me that, along with the payroll tax, there are state and federal withholdings.
Clint Stretch: The Social Security tax that everybody pays if they work is quite substantial.
Thomas Cooke, at Georgetown, points out the federal tax rate isn’t as high as it used to be.
Cooke: But when you start adding in all these other taxes, it’s clear that there is a large number of people that are paying in excess of 50 percent of their income in taxes in some way, shape or form.
And Cooke says the government is always looking for new ways to make money, for new stuff to tax, especially when budgets are tight.
In Washington, I’m David Gura for Marketplace.
You asked for our ideas for what to tax at the end of this piece; I offer these ideas:
**** A Toilet Tax (or, if you prefer, new bathroom tax). Yup, a one-time tax (or impact fee if you prefer) to be collected for each toilet installed in a new single family home when there is to be more than one per floor. More than one toilet/bathroom per floor is, well, extravagant and not really necessary. We have luxury taxes for other things--why not tax all those extra bathrooms in new McMansions being built?!
**** The Riding Lawnmower Tax. Lawns that are too large to be mowed with a push mower, besides being status symbols and all, result in more air pollution from their mowing and more storm water runnoff into our already stressed public storm sewer infrastructure. Why not a 5%, heck, make it a 10% "luxury" tax on these gas guzzling sit-on mowers and lawn tractors we Americans seem to have a love affair with?!
I thought the most important (and most disturbing) part of Romney's comments was not the issue of who pays how much of what kinds of taxes, but his assumptions about the characteristics and attitudes of the 47%. Let's take my parents as an example. They were children of the depression who believed in hard work and in never buying anything new unless you already had the money and unless you couldn't fix up the old and make it work. And they were like many of the low-income elderly that make up a substantial chunk of that 47% in that they needed government entitlement programs and some additional help to survive in the last year of their lives. For most of his adult life, my father (a steelworker) worked all the overtime he could get and usually a second job as well. Even after he "retired" from his steelworker job at age 70, he got a part-time job that he worked at until he was dying from cancer and too sick to continue. When he was too sick to be cared for at home, he spent 7 months in a nursing home, and his care wiped out most of my parents' savings. When he died, my mother managed without complaint or feeling deprived on social security plus a $250 pension from my father's work. But when she was paralyzed from a brain tumor and needed skilled nursing care herself, all her financial assets were used up quickly. She spent the last 7 months of her life indigent and on Medicaid.
I can't come up with anything my parents ever said or did that fits Romney's characterization of them as having a "victim mentality." Did they think that, after all their years of hard work, paying taxes, and making many contributions to their communities, they deserved some help in their declining years? Probably yes. But I don't think that made them whiners with a sense of entitlement who weren't willing to take personal responsibility.
There may be some people out there who are too poor to pay income taxes who also fit Romney's characterization, but I think they are a tiny proportion of the 47%.
Seriously?!? For the first time in my life I had to shut off NPR when I heard this story. Disgusted! What is the point of this story? To point out that we pay other taxes too? So insightful! It literally has nothing to do with Romney's comments. Yes there are other taxes other than income tax, this is nothing new. Who do they think listens to this show? I question why they point out that Mr Cooke teaches accounting when Mr Cooke's true forte is law. I usually trust NPR to give me straight facts not skew the truth to make their guests seem more credible. If Kai would have said Mr Cooke is a Law Professor that teaches accounting, I would have known to tune out, but when they attempt to portray him as someone that understands finance then spews that garbage, some of the us true accountants get a little annoyed.
Since the Supreme Court says that corporations are people, I think they should have been included when you delineated the "people"" who don't pay federal income tax. Many of them don't in some years, including a certain fortune 100 oil company. The also claim to be" victims"", of government regulation and feel they are ""entitled"" to special tax breaks and depletion allowances. I suspect that for some years, the list of people who paid no taxes should also include one Mitt Romney. But I guess we'll never know, will we.
I don't see not paying income tax as a bad thing. everyone pays FICA and that is not good. I thought the whole idea behind the GOP talking points was to bring the income tax rate down to 0%. I would be fine with that. We should stop the handouts, lets start with all those military contractors. Then go after the boarder patrol, which is blocking the activity of another department of government. We could go after the banks and the bail out money they keep getting from the Federal Reserve, stop catering to the Oil and Gas guys, and stop putting tariff's on things to pay off businesses that give money to political officials.
My jaw is on the floor. We all pay taxes…on our morning coffees? Real estate taxes? GIFT tax? ESTATE tax? What are you people, part of the 1%? You completely missed Romney’s main point. Those who live on handouts, let's call the handouters, pay little or no taxes OF ANY KIND. Or, and this is ironic, the taxes we pay to GIVE them their handouts pay all their taxes FOR them. So we have taxes paying taxes. Talk about double taxation! Talk about inefficient! We, the selfless, patriotic 53%, pay our own taxes, and those taxes pay for millions of other peoples’ taxes. The Occupy Movements iconic 99%, or at least a significant part of .47 x .99 = 46.5% of Americans get EBT, SNAP, SSI, HRA, HUD, Section 8, and a whole proliferation of federal, state, county, tribal, and local welfare and handout programs. Bottom line: when 53% pay income taxes and 47% do not, the 99% have nothing to complain about.
I personnally pay an average of 29% in various payroll taxes (income, SS, unemployment, etc..) and property taxes (that is one reason I won't be retiring in New Jersey). We pay an addition 7% sale tax, I have no idea how much I have paid for gasoline tax or utility taxes (electric, gas, phone, cable). I am flying to Green Bay to visit family. I do not know what the airport taxes are but the hotel is charging 15.5% tax on my stay. On the way to the airport, I have to cross a toll bridge and the toll should be considered a user fee but it is a tax since they divert toll money to non-bridge / non-road projects. So even if they are successful at lowering the federal income tax, another part of our government will raise taxes to make up for the lost funding that they are so depended on. I would not be surprise if we pay more than 50% in taxes. I can see why some people choose not to work or own anything, they still survive often with government help and charity healthcare.
