January 15, 2015

Poor Have Plenty of "Skin In the Game"

He's the real victim, here.

In the 2012 Presidential election, one of the common lines of attack from the Republicans and Mitt Romney was that 47% of Americans were, in essence, moochers. That they took from the government and gave nothing back. The solution? Make them pay more in taxes so that they, too (according to Romney and Pals), had "skin in the game".

So while the petulant whining and butthurt from all these millionaires and billionaires amounted to another defeat, the idea that the poor have it easy and need to pay more in taxes persists. Which makes the news that the poor actually do pay plenty in taxes all the more interesting.

When it comes to the taxes closest to home, the less you earn, the harder you’re hit.

That is the conclusion of an analysis by the Institute on Taxation and Economic Policy that evaluates the local tax burden in every state, from Washington, labeled the most regressive, to Delaware, ranked as the fairest of them all.

According to the study, in 2015 the poorest fifth of Americans will pay on average 10.9 percent of their income in state and local taxes, the middle fifth will pay 9.4 percent and the top 1 percent will average 5.4 percent.

Now, of course, these are not federal taxes so you'll have plenty of Republicans say this doesn't matter. But remember, the complaint was that the poor paid nothing into the system, they were "moochers". When, in fact, they pay plenty into the system.

The reason is simple. Sales taxes, excise taxes, even property taxes, are regressive taxes that take up a larger percentage of low-income wages than the incomes of the one percent. Paying a 6% sales tax on milk, or a television, hits someone making $30,000 a lot more than someone making $300,000. And when a state relies on that kind of income, the result is an unequal system where people who need money the most are the ones without it.

The result is a self-perpetuating system where low-income families are always behind and trying to catch up while the wealthiest pay relatively little. Which, to a rational person, is insane since you cannot build a healthy economy by catering to the economic concerns of a tiny minority of people.

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