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Rip-off: High Out-of-Pocket Social Costs are a Stealth Tax on the Middle Class and the Poor
Rip-off: High Out-of-Pocket Social Costs are a Stealth Tax on the Middle Class and the Poor
November 13, 2013
by Joshua Holland
Americans’ heavy reliance on the private sector to provide social goods and services doesn’t only result in us paying a lot and getting a lot less for it, compared to other wealthy countries. It also makes the financing of our entire social welfare system far less fair. It’s a great deal for the wealthiest, and a huge rip-off for the rest of us.
To understand how, we’ll need some background.
A Nasty Little Myth
The most pernicious myth in American politics holds that only around half the population pays taxes. Sean Hannity put it like this: “If half of Americans pay taxes, and the other half are the beneficiaries of the tax that the other half pay, at some point you say, OK, you got a full voting bloc.” In a call to raise taxes on the poor, Sen. Dan Coates (R-IN) said, “I think it’s important that this burden not just fall on 50 percent of the people but falls on all of us in some form.” He added, “Everyone needs to have some skin in the game.”
The narrative is the epitome of cherry-picking. While 43 percent of households won’t need to pay federal income taxes this year, that’s nothing more than a bit of tax trivia. Federal income taxes make up around 40 percent of federal revenues and a quarter of all taxes paid in this country, while payroll taxes – which virtually all working people pay – also make up around 40 percent of federal revenues (in 2011 and 2012, revenue from the payroll tax represented a smaller share due to the temporary tax reduction in effect during those years).
And the irony is that many households pay no income taxes as a result of a policy that conservative politicians have long favored. As David Cay Johnston, author of Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich–and Cheat Everybody Else, told Moyers & Company in October, the situation is primarily due to the child tax credit Republicans put in place in the ’90s. “A married couple with two children does not pay any federal income taxes until they make at least $44,000 a year,” said Johnston. “And with a little bit of tax planning, you could make $70,000 and pay no federal income tax. So the Republicans create this situation where middle-income families with children pay no income tax and then they complain about it.” .......................(more)
The complete piece is at: http://billmoyers.com/2013/11/13/rip-off-high-out-of-pocket-social-costs-are-a-stealth-tax-on-the-middle-class-and-the-poor/
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