My first check in the post-Bush tax era

I received my first paycheck since the “modifications” to the Bush era tax cuts that were approved by Congress after Christmas. It wasn’t entirely made clear that Republicans insisted that even the lowest income brackets be effected by it, but such is the case. While those making $400,000 or more ($450,000 for married couples) will see an increase of 3 percent in their federal taxes, the payroll tax that reduced the Social Security tax rate from 6.4 percent to 4.2 percent was not extended, so everyone below $118,000 will see a 2.2 percent tax increase—and I can see on my check there has been a noticeable “adjustment.” For me, it is something I can live with, because it was only this past November that I finished paying off all of my credit cards on a debt consolidation plan, which for most of the past five years consumed over $500 of my income; I’ve had to get “adjusted” to having a little money instead of no money, and $20 less a check is just something I’ll have to” live” with. Of course it might also help a little if I received even a tiny pay raise to cover three years’ worth of cost-of-living increases. 

Remember Mitt Romney’s claim that 47 percent of wage earners pay no taxes? Of course, he didn’t make it “plain” that what this figure refers to is federal income taxes, which according the Tax Policy Center includes 3,000 tax filers making more than $2.2 million who paid no federal income taxes. I’m in the $20,000-$30,000 income range, and I see that close to 25 percent of the amount of my check is deducted in taxes (my check also takes a substantial hit from the so-called “medical” plan the company offers—which I understand the employee pays the entire premium). Almost all of it is some form of federal tax and deductions. Nearly none of it is state and local taxes (except the L&I), since there is no state income tax in Washington.

But even if you are a “renter” who isn’t affected (directly) by property taxes, there is the 10 percent sales tax—which if you are in the lower income bracket and have minimal federal tax liability due to the presence of children or elderly tax credits, you still will likely spend most or all of your disposable income on the necessities of life; thus sales taxes alone amount to a de facto 10 percent income tax on all income that it isn’t used for groceries; that of course, isn’t so much a problem for those who make so much they can save or invest. In fact, 39.1 percent of those in my income range do have a significant (in relative terms) federal income tax liability to go along with those sneaky state taxes. I estimate that I pay about $1,500 a year in state sales taxes—that is, the taxes that are straightforward and obvious. In Washington’s regressive tax system, those making under $20,000 pay 17.3 percent of their income in all state taxes; the wealthiest billionaires pay an average of 2.9 percent of their income in state taxes.

The upshot of this is that it is hard for me to feel “sympathy” for millionaires and billionaires who have more money than they know what to do with (so much so they squirrel it away in secret bank accounts here and overseas). I pay my fair share and have little left over; even if they paid their “fair share,” most of our poor rich will “earn” more in six months than most of us will see in our lifetimes. Yet upon whose back is the economy dependent upon? People like me who are obliged to spend most or all of their income on consumer goods. Of course there is the credit card, but like much in this economy that passes for real money, it’s a fraud and hoax.

Oh and by the way, 10 of the 12 states with the highest percentage of people who paid no federal income taxes were the old Confederate states, and of those only Florida was in the Obama column in 2012.