Dayton Daily News
By Martin Gottlieb | Wednesday, April 21, 2010, 09:56 AM
April is said to put dread in the hearts of the American people, taxing them in more ways than one. The anger and frustration associated with April 15 used to be expressed by comedians and in social settings. Now it’s done in political demonstrations. This year, from Cincinnati to Dayton to Columbus, lots of Ohioans went to hear speakers decry the effect of taxes on freedom, on the American ideal. Complaints about taxes are the only thing more certain than death and taxes.
Here, however, after all the complaints have been heard again and again, are a few other points about how the federal income tax — and the process of paying it —Â affects actual Americans:
About 47 percent of households don’t even have enough income to owe federal income taxes. This point, too, has come in for a fair share of attention lately.
Somehow, though, its existence doesn’t dent the consciousness of those who portray April 15 as a universally shared nightmare.
The exclusion of low-income people from this tax makes the overall tax burden fairer. Low-income people do pay state and local taxes, which can hit the poor hardest.
Think about sales taxes, for example. If you have to spend every dime you make, you pay the sales taxes on a bigger percentage of your income than if you can afford to put some money away. (And you hope to see that latter money grow.)
Or look at state and local income taxes. When Ohio “reformed” its tax code in 2005, the main idea was reduction in the income tax and in its progressivity. Progressivity — the degree to which rates are higher on those with more income — is considered a bad thing at the state level. That makes the progressivity of federal income taxes all the more important.
Low-income people also pay Social Security taxes, starting with the first dollar they earn. This hits them harder than the very affluent, who don’t pay on income above a certain point.
So, bottom line, those who don’t pay federal income taxes do pay as much of their income in taxes as any other class. (Citizen for Tax Justice, among others, has run the numbers.)
A lot of people are trying to sell the notion that the federal income tax is out of control. Baloney. The stimulus that was passed last year entailed cuts for most people. The George W. Bush years saw repeated cuts. Even before that, the burden was falling as a percentage of income. Reported the Center on Budget and Policy Priorities, “The Treasury data show that in 1999, the typical family of four with two children was paying a smaller percentage of its income in federal income taxes than at any time since 1966.”
For 2008, out of 155 million individual returns filed, 90 million were done online. The IRS says more than 70 percent of those were done by professionals doing people’s taxes.
It’s a shame the code is so complex that professionals are necessary. Still, these stats dispose of the image of a people burning midnight oil in a desperate effort to understand incomprehensible forms and bureaucratic rules.
Of those filing for themselves, many use simple forms. Software programs have made even moderately complex returns easy, allowing people to fill in the same blanks every year. And many people simply have confidence in their ability to handle situations involving math and rules.
As April 15 was approaching, the IRS reported that 80 million Americans — about half of those filing personal returns — had received tax refunds. The average refund was almost $3,000.
That doesn’t tell you how much people are paying, of course. But it is another does big dent in the notion that April 15 is universally experienced as hell.
Let’s end with a couple of polls, which are best used only as supporting material. At a time when public frustration with Washington is at a high, the IRS is an exception. A Pew study finds the IRS has a favorable rating, 47 percent, that’s up 9 points, more than any agency since 1997. For a tax agency, that’s remarkably high.
Sixty-two percent of Americans say they are treated fairly by the tax code, another remarkable number, when you contemplate the special insight we all have into the universe’s tendency to victimize us more than others.
The same CBS/New York Times poll put the question to 881 people who describe themselves as Tea Party tax protesters. Even 50 percent of them say they’re treated fairly; 42 percent said no; 6 percent didn’t know. Surprising.