So, Mitt Romney proudly announced today, after perusing his past tax records, that he’s never paid less than 13% for federal income taxes.
After perusing my own past five years of tax records, I’ve never paid less than 18% for federal income taxes.
Granted, our incomes are are drastically different (it would take him a mere day and a half to make my and Shelley’s yearly income), but it raises questions about the conservatives’ penchant to gift the very rich with huge tax cuts. Or not.
Our federal income taxes are primarily a progressive tax system. In a progressive tax system, as one’s income increases they pay more taxes. The percentage is adjusted based on income; as income increases, the rate or tax bracket also increases. Our federal tax system does just that, up to a point. The tax rate actually begins to decrease for the very wealthy. The decrease is generally created by the breaks and incentives allowed by our congress for the wealthy.
Even so, the wealthy person ends up paying more for government services than I do. Part of me says it’s not fair to the wealthy. I use Interstate 5 often to get form point A to point B. If a wealthy person uses the same stretch of freeway, should he pay more than me? I don’t really have a good answer for that.
I also understand the theory behind trickle-down economics, which I believe is where all this leads. If we take care of the wealthy, the corporations, the employment sources… they’ll pass the good fortune down to the working class. Correct? I’m sure that there are corporations (they are people, right?), that actually do that. But I also believe that those honest corporations are in the minority, or trickle-down economics would work.
Sales tax is a regressive tax system. In a regressive tax system, everyone pays the same rate on items purchased. Regressive tax is not based on income, rather it’s based on the cost of goods.
The math. So, I go to the hardware store and buy a new handsaw for $24.99. I pay the 9.2% sales tax of $2.30 for a total of $27.29. Mitt Romney sees my new saw and wants one too. Same price, same tax, and same total. $2.30 sales tax is not a huge amount, but it’s a much larger percentage of my hourly wage than it is his. Even if I’m making a good wage of $30.00 an hour, $2.30 is 7.6% of that. Mitt Romney makes $10,384 an hour (based on what he reported as taxable income in 2010). $2.30 is 0.022% of his hourly income.
Bottom line: I paid 7.600% of my hourly income for sales tax. Mitt Romney paid 0.022% of his hourly income for sales tax.
With a regressive tax, the lower wage earners must pay a higher percentage of their incomes to pay the taxes on purchased goods and services.
Where am I headed with all this information? I have some real honest questions about the “best” route for our economy. Is it presumptuous of me to expect the wealthy to be saddled with more responsibility to society? What is most fair for all? I believe in our country and cherish the fact that people can be successful in their business ventures, but I often wonder if everyone truly has a equal opportunity to succeed? What can we do about greedy corporate giants who appear to care less about the less fortunate?
The issues are far broader than our federal income tax system. As I delve into the arguments, more and more questions without distinct answers appear. I certainly don’t have the answers, but searching for them will make me a more informed voter.
BTW, Mitt’s reported 2010 taxable income was $21.6 million. Simple math tells me that he paid $2.81 million in taxes.