I have been reading some major misinterpretations of what people think individuals are paying in taxes as well as wondering if they know where the money to run our government comes from. Let me start with the question on where the money comes from to run our government. It is very simple, folks. It comes from you and me, assuming you are a taxpayer. If you are not a taxpayer to the federal government, the money at the federal level is being paid for by those of us who do pay taxes. That means the 53 percent of us taxpayers that actually pay income tax at the federal level! It doesn’t just magically appear. This includes money given to the states by the federal government. That money still comes from you and me and every other taxpayer.
Now, people have written in and been very emphatic about restoring cuts to the budget. My question to all of you who want the cuts restored is, who is going to pay for the projects and items being restored? Where does that money come from?
Cuts must be made so that our obligations do not exceed our income, and we must live within our budget. Once cuts are made, the only way to restore cuts is to make other cuts to offset them. People, we are broke! Until the citizens of this country begin to understand that we don’t have money to do all the nice things we want to do and that we simply can’t do them, we are doomed to be destroyed.
Now, the second part of this involves Gov. Romney’s tax returns. What is being missed in all of this is that the governor’s percentage is his “effective tax rate percentage” and not his income bracket percentage in the tax tables. The effective tax rate is determined by dividing the total amount of taxes paid by the total income. Notice I said total income, not your taxable income, which is what the tax tables are based on. This is the only way to try and fairly identify where individuals stand.
Mitt Romney’s effective tax rate is 14.1 percent in 2011 and averaged 20.2 percent over the past 20 years. Again, please note that this percentage is not the rate used for taxable income. The effective tax percentage is determined by dividing the actual amount of taxes paid by the total income received. I challenge each of you to look at your effective rate. I doubt any of you making $100,000 or less are above 10 percent and that most of you are below a 7 percent effective rate. If you are above 10 percent, you are exceptionally wealthy!
Note that the top 10 percent of the taxpayers pay 75 percent of the taxes while 47 percent of the taxpayers pay no income tax. That makes the effective rate for 47 percent of all taxpayers zero. One can manipulate numbers to make them appear to be anything you want. These numbers are about the only ones that can’t be manipulated. Actual taxes paid divided by total income received is the only fair analysis. That is the percentage that you spent on taxes. Comparisons with GDP and other methods such as the taxable amount used for tax tables can be used in some cases but in most cases it will give you an incorrect perspective on the real facts.
The writer lives in Murrells Inlet.