After the video of a Romney fundraiser surfaced yesterday and people began to digest his comments, some are asking themselves who are the 47 percent.
As reported yesterday by Digital Journal, Romney said:
"there are 47 percent ....who are dependent on government, who believe that, that they are victims, who believe that government has the responsibility to care for them. Who believe that they are entitled to health care, to food, to housing. These are people who pay no income tax"
Ignoring the first part of Romney's statement and focusing instead on the "no income tax" portion of his statement, let's look at who makes up that 47 percent.
We will start with the definition of income tax. According to Cornell University Law School, an income tax is: A tax on an individual or a corporation's net income after deductions for various expenses and payments, such as charitable gifts or business expenses.
Investopedia defines income tax as: A tax that governments impose on financial income generated by all entities within their jurisdiction. By law, businesses and individuals must file an income tax return every year to determine whether they owe any taxes or are eligible for a tax refund.
Tax Policy Center
The Tax Police Center states: Many tax units owe no federal individual income tax because their income is too low or because tax credits reduce their tax liability to zero or lower.
According to The Tax Policy Center 46.4 percent of American households paid no federal income tax for 2011. According to the definitions of income tax, that means when a tax return was filed with the IRS, those households did not owe money or received a refund.
Of the 46.4 percent 28.3 percent pay payroll tax. The IRS defines the payroll tax, also known as employment tax, as federal income tax, Social Security and Medicare taxes that are withheld from an individuals paycheck. That leaves 18.1 percent of the American population that do not pay federal income tax or payroll taxes. Of that 18.1 percent, 10.3 percent are the elderly. Social Security and Medicare benefits are not taxable income. That leaves 7.8 percent of the American population who are not elderly that do not pay payroll or income tax.
Tax Policy Center
The 2010 U.S. Census show that 16.6 percent of the American population are disabled with 41.1 percent being able bodied enough to work. When we add the disabled population into the 7.8 percent, you find that Romney's numbers are far from being accurate.
If we look at various reason why people do not pay income tax, tax above and beyond what is taken out of the paychecks, we must take into account that although some people may not pay additional income tax, many do pay taxes in the form of payroll taxes. Another reason are allowable deductions. One example of deductions is the Bush Tax Cuts, something that Romney said should continue. Other deductions include charitable contributions, deductions for business travel, child care, and many more. Members of the military that are deployed in a combat zone are not required to pay income tax on combat zone pay.
The figure Romney quotes also do not take into account young Americans that are either unemployed or in school according to The Hamilton Project.
Although there are close to 47 percent of Americans that do not owe additional taxes when they file their income tax forms each year, saying that 47 percent of Americans are dependent on the government and pay no income taxes is simply untrue.