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Many derided by Romney for paying no income tax do pay other taxes

September 18, 2012|By Jim Puzzanghera | This post has been corrected, as indicated below.
  • Republican presidential candidate Mitt Romney meets members of the audience after speaking at the U.S. Hispanic Chamber of Commerce's national convention in Los Angeles on Monday.
Republican presidential candidate Mitt Romney meets members of the audience… (Mark Boster / Los Angeles…)

WASHINGTON -- Many of the people criticized by Republican presidential candidate Mitt Romney for not paying income taxes actually do pay taxes -- specifically the federal payroll tax, the independent Tax Policy Center said.

And nearly half of those who do not pay federal income taxes are elderly, the group found in an analysis last year.

About 46.4% of households paid no income tax in 2011, according to a breakdown by the center, a joint venture of the Urban Institute and the Brookings Institution. But about 61% of those households paid federal payroll taxes.

The payroll tax helps fund Social Security, Medicare, unemployment insurance and some other programs. Employers usually pay half of the 15.3% tax, with employees paying the other half. Those who are self-employed must pay the whole amount.

A temporary payroll tax cut, which began in 2011 and extends through this year, reduced the employee portion of the tax by 2 percentage points.

There were only 18.1% of households that didn't pay the payroll tax in 2011, the Tax Policy Center said. And that figure didn't include sales taxes and other state and local taxes.

The center's 46.4% figure for households that paid no federal income tax is roughly the same as the percentage of people Romney dismissed at a private fundraiser this year, according to comments he made on a secretly taped video that was released Monday by the Mother Jones news organization.

"There are 47% of the people who will vote for the president no matter what," Romney said in the video of supporters of his Democratic opponent, President Obama.

"All right, there are 47% who are with him, who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to healthcare, to food, to housing, to you name it," Romney said. 

"That — that's an entitlement," he continued. "And the government should give it to them. And they will vote for this president no matter what .…These are people who pay no income tax."

The Tax Policy Center last year analyzed who those people were.

About half paid no income tax because they don't earn enough money. The other half paid no income tax because of deductions and credits in the tax code.

Of that second group, 44% were elderly and had their income taxes reduced to zero by deductions and credits designed to help senior citizens.

About 30% of those whose income tax liability was reduced to zero were able to avoid the taxes because of credits designed to help families with children and the working poor, including the child tax credit and the earned income tax credit.

Of people who paid neither income taxes nor payroll taxes, more than half were elderly and only about 5% were younger people with annual incomes of more than $20,000.

[For the record, 4:10 p.m. Sept. 18: An earlier version of this post said about 44% of the people who paid no income taxes were elderly and 30% were able to avoid taxes because of tax credits to help families with children and the working poor. Those percentages actually were for people who paid no taxes because of deductions and credits, not for all people who avoided income taxes, about half of whom did so because their income was too low.] 

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