Mitt Romney the 47% who BUG him and not pay federaal income taxes

 Just which 47 percent of Americans was Mitt Romney talking about? It's hard to say. He lumped together three different ways of sorting people in what he's called less-than-elegant remarks.

Each of those three groups — likely Obama voters, people who get federal benefits and people who don't pay federal income taxes — contains just under half of all Americans, in the neighborhood of 47 percent at a given moment. There's some overlap, but the groups are quite distinct.

Confusingly, Romney spoke as if they're made up of the same batch of Americans.

A look at the three groups:

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OBAMA VOTERS
What Romney said: "There are 47 percent of the people who will vote for the president no matter what."
He's right on the nose, according to the latest Associated Press-GfK poll: Forty-seven percent of likely voters say they support Obama. And 46 percent say they support Romney, essentially a tie. This number fluctuates from poll to poll and week to week and could shift substantially before Election Day.
Who they are:
—Most are employed: Sixty-two percent of the Obama voters work, including the 10 percent working only part time. A fourth are retired. Five percent say they're temporarily unemployed.
—Most earn higher-than-average wages. Fifty-six percent have household incomes above the U.S. median of $50,000. Just 16 percent have incomes below $30,000, and about the same share (20 percent) have incomes of $100,000 or more.
—They're all ages but skew younger than Romney's voters: Twenty percent are senior citizens and 12 percent are under age 30.
—They're more educated than the overall population: Forty-three percent boast four-year college degrees or above; 21 percent topped out with a high school diploma.
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PEOPLE WHO GET FEDERAL BENEFITS
What Romney said: "There are 47 percent ... who are dependent on government ... who believe they are entitled to health care, to food, to housing, to you name it."
Whether they are dependent and believe they are entitled to anything is arguable, but Romney's statistic is about right — 49 percent of the U.S. population receive some kind of federal benefit, including Social Security and Medicare, according to the most recent Census Bureau data. Looking only at people who receive benefits that are based on financial need, such as food stamps, the portion is smaller — just over a third of the population. Many people get more than one type of benefit.
The biggest programs and their percentage of the U.S. population:
—Medicaid: 26 percent
—Social Security: 16 percent
—Food stamps: 16 percent
—Medicare: 15 percent
—Women, Infants and Children food program: 8 percent
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THOSE WHO PAY NO FEDERAL INCOME TAX

What Romney said: "Forty-seven percent of Americans pay no income tax."

Romney's about on target — 46 percent of U.S. households paid no federal income tax last year, according to a study by the nonpartisan Tax Policy Center. Most do pay other federal taxes, including Medicare and Social Security withholding. And they're not all poor. Some middle-income and wealthy families escape income tax because of deductions, credits and investment tax preferences.

Why they don't pay:

—About half don't earn enough money for a household of their size to owe income tax. For example, a family of four earning less than $26,400 would owe no taxes using the standard exemptions and deductions.

—About 22 percent get tax breaks for senior citizens that offset their income.

—About 15 percent get tax breaks for the working poor or low-income parents.

—Almost 3 percent get tax breaks for college tuition or other education expenses.

Who they are:

—The vast majority have below-average earnings: Among all who don't owe, 9 out of 10 make $50,000 or less.

—But some of the wealthy escape taxes, including about 4,000 households earning more than $1 million a year.

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http://news.yahoo.com/mitt-romneys-47-percent-breakdown-070451942--election.html
 

Why Mitt Romney Avoids Paying Full Taxes Cayman Island

Mitt Romney's income taxes have become a major issue in the American presidential campaign. Is this just petty politics, or does it really matter? In fact, it does matter – and not just for Americans.

A major theme of the underlying political debate in the United States is the role of the state and the need for collective action. The private sector, while central in a modern economy, cannot ensure its success alone. For example, the financial crisis that began in 2008 demonstrated the need for adequate regulation.

Moreover, beyond effective regulation (including ensuring a level playing field for competition), modern economies are founded on technological innovation, which in turn presupposes basic research funded by government. This is an example of a public good – things from which we all benefit, but that would be under-supplied (or not supplied at all) were we to rely on the private sector.

Conservative politicians in the US underestimate the importance of publicly provided education, technology, and infrastructure. Economies in which government provides these public goods perform far better than those in which it does not.

But public goods must be paid for, and it is imperative that everyone pays their fair share. While there may be disagreement about what that entails, those at the top of the income distribution who pay 15% of their reported income (money accruing in tax shelters in the Cayman Islands and other tax havens may not be reported to US authorities) clearly are not paying their fair share.

There is an old adage that a fish rots from the head. And if no one does, how can we expect to finance the public goods that we need?

Democracies rely on a spirit of trust and co-operation in paying taxes. If every individual devoted as much energy and resources as the rich do to avoiding their fair share of taxes, the tax system either would collapse, or would have to be replaced by a far more intrusive and coercive scheme. Both alternatives are unacceptable.

More broadly, a market economy could not work if every contract had to be enforced through legal action. But trust and co-operation can survive only if there is a belief that the system is fair. Recent research has shown that a belief that the economic system is unfair undermines both co-operation and effort. Yet, increasingly, Americans are coming to believe that their economic system is unfair; and the tax system is emblematic of that sense of injustice.



The billionaire investor Warren Buffett argues that he should pay only the taxes that he must, but that there is something fundamentally wrong with a system that taxes his income at a lower rate than his secretary is required to pay. He is right. Romney might be forgiven were he to take a similar position. Indeed, it might be a Nixon-in-China moment: a wealthy politician at the pinnacle of power advocating higher taxes for the rich could change the course of history.

But Romney has not chosen to do so. He evidently does not recognise that a system that taxes speculation at a lower rate than hard work distorts the economy. Indeed, much of the money that accrues to those at the top is what economists call rents, which arise not from increasing the size of the economic pie, but from grabbing a larger slice of the existing pie.



Those at the top include a disproportionate number of monopolists who increase their income by restricting production and engaging in anti-competitive practices; CEOs who exploit deficiencies in corporate-governance laws to grab a larger share of corporate revenues for themselves (leaving less for workers); and bankers who have engaged in predatory lending and abusive credit-card practices (often targeting poor and middle-class households). It is perhaps no accident that rent-seeking and inequality have increased as top tax rates have fallen, regulations have been eviscerated, and enforcement of existing rules has been weakened: the opportunity and returns from rent-seeking have increased.



Today, a deficiency of aggregate demand afflicts almost all advanced countries, leading to high unemployment, lower wages, greater inequality, and – coming full, vicious circle – constrained consumption. There is now a growing recognition of the link between inequality and economic instability and weakness.

There is another vicious circle: economic inequality translates into political inequality, which in turn reinforces the former, including through a tax system that allows people like Romney – who insists that he has been subject to an income-tax rate of "at least 13%" for the last 10 years – not to pay their fair share. The resulting economic inequality – a result of politics as much as market forces – contributes to today's overall economic weakness.

Romney may not be a tax evader; only a thorough investigation by the US Internal Revenue Service could reach that conclusion. But, given that the top US marginal income-tax rate is 35%, he certainly is a tax avoider on a grand scale. And, of course, the problem is not just Romney; writ large, his level of tax avoidance makes it difficult to finance the public goods without which a modern economy cannot flourish.

But, even more important, tax avoidance on Romney's scale undermines belief in the system's fundamental fairness, and thus weakens the bonds that hold a society together.


http://www.guardian.co.uk/business/economics-blog/2012/sep/03/mitt-romney-tax-avoidance-society