IS THE NATION FULL OF FREELOADERS?" Syracuse Tax SocietySeptember 25, 2012

Len BurmanCenter for Policy ResearchMaxwell School

Mitt Romney and the “47Percent”

“There are 47 percent of the people who will vote for the president no matter what. All right, there are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it. That that's an entitlement. And the government should give it to them. And they will vote for this president no matter what…These are people who pay no income tax.”

-- Mitt Romney, May 17, 2012, Boca Raton, FL

WSJ: “Lucky Duckies”“Who are these lucky duckies? They are the beneficiaries of tax policies that have expanded the personal exemption and standard deduction and targeted certain voter groups by introducing a welter of tax credits for things like child care and education. When these escape hatches are figured against income, the result is either a zero liability or a liability that represents a tiny percentage of income. The 1986 tax reform, for example, with its giant increase in the personal exemption and standard deduction, took six to seven million people off the tax rolls.

“This complicated system of progressivity and targeted rewards is creating a nation of two different tax-paying classes: those who pay a lot and those who pay very little. And as fewer and fewer people are responsible for paying more and more of all taxes, the constituency for tax cutting, much less for tax reform, is eroding. Workers who pay little or no taxes can hardly be expected to care about tax relief for everybody else. They are also that much more detached from recognizing the costs of government.”

Source: “The Non-Taxpaying Class” (editorial), Wall Street Journal, November 20, 2002.

Who are the Lucky Duckies?Households who don’t pay income tax, 2011

Some Statistics About Households that Pay Neither Income Nor Payroll Tax• More than half are elderly• Over one-third are nonelderly with income under $20,000• Only about 1 in 20 is nonelderly with income over $20,000

Source: Tax Policy Center

Income and Payroll Tax as Percent of Incomeby Income Group, 2011

Percentage of Taxpayers Who Pay More Payroll Tax than Income Tax, by Income Group, 2011

Note: Chart shows statistics for tax units that pay at least some income or payroll tax. Thus, it excludes most elderly households. Payroll tax includes only employee share.

Statistics About Relative Payroll and Income Tax Burdens• 50.6% of taxpayers pay more payroll tax (employee share

only) than income tax• 76.1% of taxpayers pay more payroll tax than income tax

when employers' share of payroll tax is included• Economists think that the “employer share” of payroll tax is

ultimately paid by employees in the form of lower wages

Source: Tax Policy Center

10 Largest Tax Expenditures, FY2013 In Billions of Dollars

Effect of Various Components on Poverty Rate For Kids and All Households, in Percent, 2010

Note: Poverty rate is the “supplemental poverty measure.”