Q. Mitt Romney has stated that 47 percent of voters pay no income tax and that they will vote for Barack Obama on Tuesday no matter what. A friend of mine told me that he had read that the actual figure was approximately 18 percent -- and that about 1,400 of them were millionaires or even multimillionaires. Can you please determine the real numbers and whether most are people who refuse to take responsibility for their lives or if there are other reasons?
-- Ron Morfick, of Belleville
A. If everyone who paid no income tax in 2011 votes to re-elect Barack Obama, I would think Mitt Romney will be in real trouble on Tuesday.
Yes, Romney was correct when he said that 76 million out of 164 million filers paid no individual income tax in 2011. That's 46.5 percent, according to detailed figures from the Tax Policy Center, so your friend is wrong.
But when Romney said, "There are 47 percent ... who are dependent upon government, who believe the government has a responsibility to care for them," etc., he, too, was mistaken and probably wishes he could eat those words now.
Just look at the Tax Policy Center's numbers. Of the 46.5 percent who paid no income tax, 723,000 reported incomes of $75,000-$100,000; 381,000 took home $100,000-$200,000; 103,000 earned $200,000 to a million -- and 7,000 (not 1,400) boasted incomes of more than a million. And that's not counting another 14 million with incomes from $30,000-$75,000.
Now before I get another wave of hate mail, let me say I'm only reporting numbers, not judging the fairness of the tax code. Also, the percentage of high earners is extremely small -- for example, just 1.6 percent of all people who earn more than a million pay no taxes compared to 81 percent of those who earn $10,000-$20,000. But I think the numbers make it obvious that not everyone who avoids paying income tax is "dependent upon government" -- nor will they all automatically vote for Obama.
So how do more than 76 million filers wind up with a big fat zero for a tax bill? There are a myriad reasons, so let's look at a few of the biggest:
Half -- about 38 million -- reportedly pay no income tax because the standard deduction and personal exemptions offset their income. Basically, they're too poor by federal standards, so a married couple earning $18,700 or less generally will pay no income tax.
Roughly 17 million take advantage of tax breaks for the elderly to help eliminate their income tax obligations. These include the extra standard deduction for those over 65, the exclusion of some Social Security benefits and a low-income credit for the elderly.
Another 11 million use tax provisions designed for children and the working poor. These include the Child Tax Credit and the Earned Income Credit.
We're not close to being done. About 2 million avoid the tax because they earn non-taxable income such as SSI while another 2 million use education credits. And, there's 2 million more who take advantage of tax-exempt interest income along with "above-the-line" deductions, such as alimony and IRA contributions.
Still with me? Yet another 2 million avoid taxes by using the deductions most of us know and love -- mortgage interest, real estate taxes and charitable contributions. There's a million who used some of those more esoteric credits found on the back of the 1040 -- the residential energy credit, for instance.
Finally, it is estimated that about a half-million filers avoid taxes because they earn a large portion of their income through capital gains. As you may know, long-term capital gains are taxed at a lower rate than regular income so it takes less in deductions to offset the income.
So, yes, just as you'll probably find in most groups, there are leeches out there who avoid working at all costs in favor of government and other societal handouts. But the Tax Policy Center numbers clearly show that the vast majority do earn some form of legitimate income.
Again, I'll let you decide the fairness of the system and whether you to ask your representatives for changes. Also, don't forget that many people who don't pay income tax do pay into Social Security and Medicare along with gas, sales and other taxes. Only 18.1 percent paid no income OR payroll taxes (your friend misunderstood) -- and a goodly number of those were elderly.
I leave you with one final troubling number: In 2004, 32 percent of filers paid no income tax, so the percentage grew by nearly 45 percent in seven years. With luck, Obama or Romney will get more people on the payrolls to turn that around.
How many rounds did John L. Sullivan and Jake Kilrain fight in what is often considered the last bare-knuckle heavyweight title bout?
Answer to Saturday's trivia: Garson Kanin, who wrote "Adam's Rib," once wondered why Spencer Tracy always demanded top billing over Katharine Hepburn, according to "A Remarkable Woman: A Biography of Katharine Hepburn" by Anne Edwards. Kanin said, "She's the lady. You're the man. Ladies first?" To which Tracy reportedly replied, "This is a movie, chowderhead, not a lifeboat."
Send your questions to Roger Schlueter, Belleville News-Democrat, 120 S. Illinois St., P.O. Box 427, Belleville, IL 62222-0427 or firstname.lastname@example.org