"There are 47% who are ... dependent upon government, who believe that they are victims, who believe that government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you name it." So said Mitt Romney in what became of the most contentious and frequently quoted lines of the campaign season. Shortly after uttering those words, Romney clarified where he had gotten the 47% figure: "These are people who pay no income tax. 47% of Americans pay no income tax."
The clear implication was that those Americans who pay no income tax receive lavish government entitlements for free. However, a recent report [PDF] from the Institute on Taxation and Economic Policy suggests that the opposite is true: While Americans in lower income brackets pay less in federal income tax, they pay a greater share of their income overall once other federal and state taxes—including sales and excise taxes—are factored in.
"The main finding of this report is that virtually every state’s tax system is fundamentally unfair, taking a much greater share of income from middle-and low-income families than from wealthy families," reads the study, which claims to be based on data culled from "one of the largest databases of tax returns and supplementary data in existence." Members of the bottom 20% economic bracket, the report finds, pay nearly twice as much as the top 1%, as a proportion of their overall income.
As sociologist Jason Eastman writes at the blog Sociological Images, "the cumulative tax system is regressive because sales, excise and property taxes offset progressive income taxes at both the state, and federal levels."
Eastman also clipped this revealing chart from the report:
The state with the most regressive taxes is reportedly Washington state, where the bottom 20% pay over six times as much of their income as the top 1%. The study argues that the most regressive state tax codes tend to include "little or no income tax," whereas the least regressive tax codes rely heavily on the personal income tax, include refundable tax credits (such as the Earned Income Tax Credit), and keep the sales tax low.
Center on Budget and Policy Priorities senior fellow Elizabeth McNichol said it was difficult to make any generalizations about how much of a return lower-income Americans might see on their tax dollars, given the broad differences between various states' budgets. "It's very hard to break out the spending in that way," she said.
"A lot of state spending goes to people on all different levels of the income scale," said McNichol. "Public education is probably the biggest chunk, and while poor people go to public schools, so do middle-income people, so do some higher-income people."
What is known is that a battle rages across the country over whether to redistribute tax dollars back down to lower income brackets. The Republican governors of Florida, Pennsylvania, Louisiana, and Wisconsin, among others, have resisted attempts to expand Medicaid within their states. Congressional Republicans have also recently proposed cutting food stamps and fought efforts to extend unemployment insurance.
Democrats have previously signaled some support for shrinking various safety net programs (such as Social Security) which the poor rely on disproportionately, though they also pushed the Medicaid expansion and a stimulus bill that included billions in spending on anti-poverty programs.