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Romney's '47%' includes thousands of millionaires

September 19, 2012|By David Lazarus
  • Contrary to Mitt Romney's suggestion, thousands of millionaires are among those who paid no federal income taxes last year.
Contrary to Mitt Romney's suggestion, thousands of millionaires… (Investopedia )

To hear Republican presidential nominee Mitt Romney tell it, the "47%" of people who pay no federal income taxes are a bunch of government-hugging freeloaders who aren't pulling their economic weight.

In fact, he's talking about his fellow millionaires. At least some of them.

According to the Tax Policy Center, about 4,000 households with annual incomes over $1 million ended up paying zilch in federal income taxes last year. An additional 14,000 households falling into this category made between $500,000 and $1 million.

These aren't huge numbers compared with the roughly 76 million elderly, disabled and low-income Americans who also had no federal income tax liability (although nearly all paid other taxes, such as state and sales taxes).

But the presence of thousands of relatively wealthy folk on the no-taxes list highlights that we're not talking about a nation of moochers. We're talking about a tax system that both accommodates those of limited means and allows others to play all sorts of accounting angles.

For instance, many upper-income people live off their investment gains and in a given year report large investment losses that may be able to offset taxes owed. Or they may have tax-free investments, such as municipal bonds.

The percentage of non-taxpayers changes annually. But the Tax Foundation says there hasn't been a single year since 1916 in which every last American paid federal income taxes.

The percentage of non-payers has ranged from a low of 7.5% in 1943 to a high of 56.1% in 1934. Since 2000, this group has grown from 25% to more than 40%.

Romney may want to keep that in mind when he speaks of these people. They ain't heavy. They're his brothers.

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