By Jessica Chau
Mitt Romney’s comments about the 47% of Americans who do not pay income taxes is getting a lot of attention in the press today and our first article takes a look at who these folks are. We also feature a terrific piece from a small business owner about the importance of taxes to our economic future, and our last article talks about why it’s really hard to say how tax changes affect the economy.
New York Times Economix blog, Annie Lowrey, 9/18/2012
The nonpartisan and highly respected Tax Policy Center derived the 47 percent number – it is actually 46 percent, as of 2011 – and published an excellent analysis of it last summer.
It found that about half of the households that do not pay federal income tax do not pay it because they are simply too poor. The Tax Policy Center gives as an example a couple with two children earning less than $26,400 a year: The household would pay no federal income tax because its standard deduction and other exemptions would simply erase its liability.
The other half, the Tax Policy Center found, consists of households taking advantage of tax credits and other provisions, mostly support for senior citizens and low-income working families.
Put bluntly, these are not households shirking their tax liabilities. The pool consists mostly of the poor, of relatively low-income working families and of old people. The tax code is specifically designed to reduce the burden on them.
Pittsburgh Post-Gazette, Josh Knauer, 9/16/2012
As a software entrepreneur, I find it ironic to see people going online to rail against taxes and government spending. The Internet grew from government research financed by earlier generations of taxpayers. So did computers, GPS technology and many other technologies we take for granted today.
The Global Positioning System we access from our phones, computers and cars was developed and is still operated by the Department of Defense, which does not charge user fees.
My company, Rhiza Labs, was recently named one of Pittsburgh’s 10 fastest-growing tech companies. We make easy-to-use tools for collecting, analyzing and sharing data online. My business has directly benefited from the tax dollars that went into the research that created Internet technologies long before Rhiza was established. Like many businesses, we’ve had customers from both the public and private sector — from AT&T and Comcast to Pittsburgh Public Schools and the United Way.
The Atlantic, Derek Thompson, 9/17/2012
Mitt Romney claims that cutting taxes will supercharge the economy. Barack Obama says that raising taxes on the richest earners won’t dampen the recovery. Who’s right? Maybe both. Maybe neither. And the unfortunate truth is that we might never know.
Last week, the Congressional Research Service published a new study that looked at whether cutting taxes for high-earners slowed down the economy. Their answer: Not really. Cutting the top marginal rates on earnings and investment had little effect on economic growth.