by DEREK THOMPSON, the Atlantic
Mitt Romney's 47% moment breathed new life into the idea that the U.S. is divided between "the makers" and "the takers."
The story goes like this. There are those who make money and pay taxes: The top 10% of earners pay 70% of federal income taxes. And there are those who take money and don't pay taxes: About half of Americans live in households that receive direct government benefits, like Medicare, Social Security, or food stamps. A similar share of the country doesn't owe federal income taxes.
I have three problems with this storyline.
First, if you live in the United States, you're a Taker. It's not the 47%. It's the 100%. Government provides services and benefits that are impossible not to take, from national defense, to infrastructure, to food and drug safety. We're all beneficiaries of not getting invaded, having roads, and not getting poisoned by our dinner and over-the-counter medication.
Second, if you work in the United States, you're a Maker. It's not the 15 million -- that 10% households who owe most federal income taxes. It's the 155 million -- the labor force, not counting the millions of people who want but cannot find a job. It's true that richer people pay more. But they also earn more. The top 1% pays more federal taxes than the bottom 60% combined. That sounds outrageous. But the top 1% also makes more than the bottom 40% combined.
Here are two nice graphs, from Tax Policy Center data. On the left: This is how the income pie is sliced for each quintile. The richest 20% earns more than 50% of the income. On the right: This is how the tax pie is sliced for each quintile. The richest 20% pays about 66% of total federal taxes. Upshot: High income inequality combined with a progressive tax system means the burden of paying for government falls heavily on the top 20%. (These graphs don't include state and local taxes, which are considerably more regressive.) [MORE]