After my twitter tirade this morning on the Mitt Romney selection of Paul Ryan as Vice President I added a blurb asking Mitt Romney again about his tax returns. Kenny K @GoAvi8tor had to chime in with the above quote (he also made a derogatory reference to my dog and her picture on my twitter page). Well, this is a common talking point from those who apologize for the uber rich, that they already pay more taxes than the rest of us, so lay off them! I’ll try to keep this simple and succinct for those people should they have the courage to read and intelligence to comprehend this rant.
Surviving in the world today requires money. I know that’s a wild concept for many but it’s true. Basic living expenses, housing and food, breaks down to what is called the “Poverty Level”. The poverty level for a family of four in this country is $23,050.00. Basic subsistence is about at that level, though many would argue it should be higher. Currently in our nation, 46 million Americans live at or below the poverty level. Those below that level get government assistance to merely survive. Despite talking points recently flaunted in campaign ads from the Romney Camp, only 4.2 million Americans get what is commonly known as Welfare. However, to get that welfare, they must actually be employed, and can only collect that money for a grand total of 5 years of their entire lives. After that, they don’t ever get a dime again. This has been in place since 1996 and hasn’t changed at all, nor has anyone in the administration proposed any changes.
So, we have people at or below the poverty line. They pay no Federal Income tax. None at all. However, they do pay FICA (if employed) and pay State, County, City and sales taxes. The taxes they pay come out of what little money they have in order to simply survive. You can say it comes out of their disposable income if they had any disposable income, which they don’t.
Now if you make above the poverty level, then in theory you have more disposable income, money above what is absolutely needed to survive in the country. The more you make, the more in Federal Taxes you should be paying, is called a “Progressive Tax Code”. This is an amount over the money absolutely needed to survive. The more money you make over this level, the better your standard of living and in theory, the more you are able to pay in taxes and not impact that standard of living. In short, you’re not taxed into poverty.
Now let’s take the example of Mitt Romney (for whom we still don’t know what tax rate he’s paid over the past 12 years and beyond). If we take him at his word, he is worth $250,000,000.00 and earned $21,600,000.00 in 2011. At the reported 13.9% income tax rate he paid, that means he paid approximately $3,002,400.00. At that rate, Kenny K is right, Romney paid more in taxes than I could earn in 5, possibly even more than 5 lifetimes. But here’s the thing of it. Take that $3,002,400.00 away from his earnings of $21,600.000.00 for 2011 and he’s left with $18,597,600.00 to apply to his standard of living. And he has a very high standard of living. The man and his family will never starve or end up living on the streets. How could he? You know how many homes you can own if you’re worth $250,000,000.00?
Now let’s apply that tax rate to someone who earns let’s say the average American Household income of $46,326.00. 13.9% of that is $6,469.31 leaving $39,856.69 to live on. Now keep in mind two things, the average federal tax rate for that income as head of household is actually 13.6% very close to what Romney declared. Very nice. But the remaining money goes to home, food, healthcare, State, County, City, Sale taxes, all eating into that $39,856.69 left for an average family of four. Anything higher would certainly impact their “Standard of Living”.
Those who advocate a flat tax rate appear to not understand that such a rate would severely impact those on the lower wage scale, so those people actually could be taxed into poverty. Our current progressive tax rate is designed to bring in the needed funds to run this government and not tax people into poverty. Since the 1% actually do control 40% of the nation’s wealth, wouldn’t be fairer they pay 40% of the taxes coming in. Oh wait a minute, they do. And guess what, they can pay more and still have no impact on their standard of living.
So, if we doubled Mitt’s tax rate to 27.8% of his 2011 income of $21,600.000.00 he would be paying $6,004,800.00 leaving him $15,595,200.00 to live off of for that year. Can you tell me that his standard of living would be compromised as a result? Would he be taxed into poverty?
Do the same to the average family we discussed earlier. Double their 13.6% tax rate to 27.2% and apply that to their $46,326.00. That would be $12,600.62 leaving them $33,725.38 for a family of four. And guess what, they are now getting closer to the poverty line in this nation for a family of four. They are slowly being taxed into the poverty level of $23,050.00 discussed earlier.
It’s not the amount of taxes you pay that determines fairness, it’s the amount you can pay and not have it impact you and your family’s standard of living. That is the math, that is the fairness. Why stick up for the uber rich who have been sticking up the 99% for their own self-interest?