Republican presidential nominee Mitt Romney took this fact grossly out of context at a private Florida fundraiser this year: Nearly 47 percent of Americans pay no federal income tax. In the video of his comments that was made public last week, Romney characterized that 47 percent as freeloaders who depend on the government for everything, which is factually incorrect and reflects an offensive cynicism about nearly half the nation. Yet the controversy over his callous remarks offers an opportunity for a more informed debate over key questions: Who should pay taxes? And what should those taxes pay for?
But first, some context. The income tax is not the only levy that Americans pay. In fact, the payroll tax, paid by every person who works, provides the federal government with 40 percent of its revenue. The income tax? Forty-two percent. And while it is true that the richest pay the largest share of taxes collected (the top 1 percent of earners pay 21.6 percent of all taxes collected in the nation), that same tiny slice of people also earns 21 percent of all income.
Romney effectively would divide Americans into "makers" and "takers," with the implication that the makers must labor industriously to provide for the takers, who mooch off the hard work of others. That sort of class warfare is at odds with the facts. First, more than eight in 10 Americans pay either income tax or payroll tax or both. Second, anyone who gasses up a car also pays a tax to the federal government, as does anyone who has a stiff drink. And of that remaining slice that pays neither income taxes nor the payroll tax? More than half are elderly, many who already paid taxes during a lifetime of work and are now collecting Social Security and Medicare benefits. Yes, they are part of the "47 percent."
As the charts on the front of today's Perspective show, nearly all Americans are "makers" during their lifetimes. But what of the "takers"? We are all takers. We all use government services. Who pays to protect our borders? Your taxes do. Who pays our police officers and our firefighters? Your taxes do. Who pays our teachers? Your taxes do. And who provides for those who cannot provide for themselves? Your taxes do. Who built that road, that school, that fire station? Your taxes did.
The nation needs to address raising revenue, cutting spending and reforming the tax code. There is a fine debate to be had about who should pay what. And there is an equally important debate about how those tax revenues should be spent. But there is no denying what Oliver Wendell Holmes Jr. once wrote: "Taxes are what we pay for civilized society."