“47 Percent”

David Leonhardt, with characteristic clarity, gives much-needed context to the misleading statement that 47 percent of American households don’t pay any taxes:

The 47 percent number is not wrong. The stimulus programs of the last two years — the first one signed by President George W. Bush, the second and larger one by President Obama — have increased the number of households that receive enough of a tax credit to wipe out their federal income tax liability.

But the modifiers here — federal and income — are important. Income taxes aren’t the only kind of federal taxes that people pay. There are also payroll taxes and capital gains taxes, among others. And, of course, people pay state and local taxes, too.

Even if the discussion is restricted to federal taxes (for which the statistics are better), a vast majority of households end up paying federal taxes. Congressional Budget Office data suggests that, at most, about 10 percent of all households pay no net federal taxes. The number 10 is obviously a lot smaller than 47.

All good stuff, but what I find more interesting is this: let’s say it was true that nearly half of American households don’t pay any income taxes, as many on the right would have you believe. It’s a proveable fact that our system of taxation is not actually all that progressive (although those same right-wingers would never admit this either). Given that, shouldn’t the really troubling aspect of the 47 percent figure be the sky-high-and-rising level of income inequality necessary for such a case even to be possible?

The Stimulus Worked

As David Leonhardt points out in a great column that’s making the rounds.