Hello community. It has been a while since I last wrote anything here. I must admit it has been 3 years, but I've been following stories from the shadows.
Anyhow, what brings me here today is something I am trying to understand .. taxes. It seems like candidates like to slice and dice them and use these numbers to their advantage. And because there are so many different kind of taxes, it make it even more difficult to follow the truth.
More below the fold .. please follow.
My story being with me posting an image of Seth Meyers from SNL and a quote (joke) that said "The 14% tax rate Romney paid is less than the 20% paid by the average American. How did he pay such a low rate? He claimed 47% of Americans as dependents." The graphic was made by the DCCC. At the same time I also posted this link to a dKos article from Sunday.
So this seemed to have upset my right-wing cousin (hence forth RWC) and there were words exchanged.
My RWC started with:
IRS data from 2010 shows someone making between $50,000 and $75,000 on average pays an effective rate of 7.8 percent. Even someone making between $100,000 and $200,000 pays a 12.1 percent rate -- also lower than Romney's. Comparing 'effective tax' vs tax brackets is comparing apples to oranges.
I was easily able to find that most of this was directly taken from
this FOX news article. So I quickly smelled a rat .. or so I thought.
The FOX article linked to this factcheck.org article from August. In this article they say:
In February, the nonpartisan Tax Policy Center released an analysis that found that when you include income tax and payroll taxes paid both by the employee and employer, people in the middle 20 percent paid an effective rate of 15.5 percent. That’s a higher percentage than Romney (who paid no payroll taxes because he declared no wages or salary in 2010). So the ad’s claim is certainly defensible.
So I can see where the 15.5% comes from, and it is less than the 20% Meyers joked about (and the DCCC spread around). But is that it, or is there more?
I understand that Romney makes all of his money through dividends which are taxed at the historically low rate of 15% .. while people who earn their pay are taxed up to 35% on their earnings. And that right there is a big advantage to Romney and that is why he pays nearly 50% less than those millionaires who earn the majority of their pay. He also cheats the government by putting money in off shore accounts and tax havens, something the average person can't do because they need the money now. I also know that Romney overpaid in 2011 to keep his rate high, and that after he loses in November he will probably file amended returns to get the rest of his money back -- making his rate as low as 9%.
But through deductions and whatnot, the average rate for the middle income worker is 15.5%. This goes against what I thought ... I always thought it was closer to 30%. Can anyone help me to reconcile this? I thought that Romney's rate was lower than most middle class folks, not in line with. Can someone smarter than me help me to understand?