Aprox 60 percent of income taxes are paid by the top ten percent. They also hold 90 percent of the nations wealth, so the distributive effect is upwards, not out from the middle or downn to the poor, and that is an economic disaster. The only way to get dead money recirculated in that environment is by raising taxes on the top earners.
This can easily be seen by the effect the tax rates Bush had in place had on the distribution of wealth in america, versus the fact that at the Clinton rates of taxation america would have paid off it's entire national debt by 2013... that would be in 13 months.
To say that 47 percent of Americans pay no income tax is foolhardy, because in order to receive social security benefits, you have to pay income taxes for five years.
In a strict sense, you could say that Romney himself has not paid income taxes since 2003, the last time he reported earnings from Bain capital. That was before the retroactive resignation, of course.
Romney pays capital gains taxes.
The reason that these two crowds.... the Rich who pay no income tax and the poor who do not... the reason they are so different is that, once again as in Mr Romney's case, you find that it's possible to be paid directly into portfolios with stock and stock options... Mr Romney owns 8 million in Bain Capitol stock, and he received those without being taxed as per his contractual agreement.... love those golden parachutes.
these things are removed from the whole before income tax is assessed, and if its the exclusive way they are paid, or the method of payment is bonus heavy, the top earners pay no income tax, wind up getting refunds ... remember they wrote the code and have very exotic methods of income tax evasion.
The poor and elderly that pay no income tax generally do that because either they are below the poverty line, or are exempt because they have paid income taxes on the money already when they earned it. In that scenario, the interest on the principle is considered capital gains, and usually falls well below the taxation thresh hold.
Having said all of this, I feel that the whole 47 percent issue is a straw man argument, because the truth is, this only considers income tax, not payroll taxes, not sales taxes, and not state income taxes, just to name a few. There are few ways to legally avoid these taxes, unless you truly are unemployed, penniless, buy nothing, live no where, use no form of transport, and have all your needs met through charitable contributions of a family member.
If you are unemployed, why SHOULD someone pay income tax? income tax when you have no income? this is the precise type of taxation without representation that caused the american revolution.
The disproportionate effect that this has on the economy is that the rich tend to be able to pay the added taxes, such as sales and luxury, while the poor have to buy less to pay these things. This means that the people that CAN afford to pay more generally don't and the people that can't afford to pay more generally do, and go without purchasing goods that could further contribute to the economy.
It's a very broken system, and the middle class are by and large the tax payers. The reduction in the size of the middle class and their income tax contributions is one of the main causes for unexpected expansion of the national debt.
