The topic of federal income taxes continues to be a hotly-discussed topic in the race for the White House.
A video of presidential candidate Mitt Romney that was released on Monday shows him responding to a question about federal income tax cuts. Romney’s key point in the video is that many people are not concerned about taxes because approximately half of those in the United States pay very little or even no federal income tax.
Statistics released by the National Taxpayers Union show that approximately the highest 1% of income earners in the United States pay over 35% of the federal income tax that the Internal Revenue Service (IRS) collects each year. In addition, the highest 10% of income earners pay over 70% of the federal income tax. Alternatively, the lowest 50% of income earners pay less than 2.5% of federal income tax.
This means that the vast majority of the funds the United States government uses to function fall on the shoulders of the wealthy to pay. It also means that in order for the United States government to have an effect on the amount of federal income tax they receive, they must focus on tax increases and decreases that target the wealthiest people.
Romney contends that reducing taxes for the wealthy will allow them to invest more in businesses, which will in the end result in more taxes collected by the United States. This, along with reductions in government spending, can be used to start to chip away at the federal deficit.
Therefore, the attacks by the Obama administration on Romney for wanting to reduce taxes for the wealthy appear to be unfounded, because tax cuts for anyone else will not have a significant impact on federal income tax and government revenue.
The federal deficit now stands at over $16 trillion, having grown by over $5 trillion in the past four years under President Obama. During the same four year period, the United States economy grew by just under $1.7 trillion.
Romney’s statements in the video was as follows: “There are 47% of the people who will vote for the president no matter what. 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 they are entitled to health care, to food, to housing, to you name it. These are people who pay no income tax, 47% of Americans pay no income tax. So our message of low taxes doesn’t connect. So he’ll (President Obama) be out there talking about tax cuts for the rich. I mean, that’s what they sell every four years. And so my job is not to worry about those people. I’ll never convince them that they should take personal responsibility and care for their lives. What I have to do is convince the five to ten percent in the center that are independents, that are thoughtful, that look at voting one or the other depending upon in some cases emotion, whether they like the guy or not.”
Romney has continued to stand by the above comments, both during the presidential campaign and throughout his career.
Mark has been a contributor to legal web sites related to bankruptcy, tax, and criminal law since 2011. He has an Accounting degree from Texas A&M University.