ABC News' Amy Bingham reports:
Beyond who is leaving who at the altar, which party is stealing Christmas or who needs to get their ass in line, the debt ceiling stalemate between House Republicans and the White House seems to boil down to one issue: taxes.
While the president and insists on a “balanced” approach to deficit reduction that includes both spending cuts and more tax revenue, House Speaker John Boehner has made it explicitly clear that the problem is spending, not revenue.
A new voice, or tweet, rather, was added to the tax banter this week when mega church Pastor Rick Warren, who said the prayer at Obama’s inauguration, seemed to suggest that the president’s tax revenue plan was, in fact, entirely un-balanced.
“HALF of America pays NO taxes. Zero,” Warren tweeted. “So they’re happy for tax rates to be raised on the other half that DOES pay taxes.”
The tweet raised eyebrows and outcries from the blogosphere, prompting Warren to delete the tweet and acknowledge that “it did sound mean.”
But is it true? Does half of America get off scot-free when it comes to paying taxes?
Not exactly. When looking only at federal income tax, Warren is correct. Forty-seven percent of people either have such a low income that they are exempt from the federal income tax or they qualify for enough tax credits that they get more back than they pay in.
For example, a married couple with two children could have an annual income of about $46,000 and still pay no income tax after deductions, child tax credits and an earned income tax credit.
But federal income taxes are just a small part of the overall tax picture. There are still property taxes, state income taxes, payroll taxes, sales taxes and excise taxes, just to name a few.
To actually pay zero taxes, someone would have to be unemployed, not own any property, live in Delaware, Montana, New Hampshire or Oregon, where there is no sales tax, and not buy anything that has an excise tax, such as alcohol, cigarettes or gasoline.
“I would expect there’s somebody out there like that,” Williams said. “It’s a big country. There’s a lot of people. But you would have to do things that most of us don’t do. They have to be different than what most of us are.”
Williams said that about half of those who do not pay income tax are still paying the 7.65 percent payroll tax, which is taken directly out of people’s paychecks for Social Security and Medicare.
In fact, 64 percent of the country will pay more in payroll taxes than they do in income taxes this year.
Only 18 percent of people who are old enough to work will escape both income tax and payroll tax. Almost all of them will be retired or unemployed.
When all federal taxes are taken into consideration, the tax burden is distributed slightly more equally than Warren’s tweet suggested, especially compared to how income is distributed.
For example, this year, the top 20 percent of earners, or people who earned more than $103,000, will pay about 70 percent of all the federal taxes collected, but this top tier also holds more than half of all the income earned in the United States this year.
Meanwhile the lowest 20 percent of earners will hold less than 4 percent of the country’s income and pay just .2 percent of all federal taxes.
So while it is clear that higher-income Americans pay more taxes, the top tier clearly does not pay all the taxes.