Who Are the 47 Percent? 7 Facts about the Americans Mitt Romney Attacked

Mitt Romney attacked the nearly 47 percent of Americans who don’t pay income tax. But many are elderly and poor. Some are rich, and a good number are conservative. Kevin Fallon breaks it down.

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Mitt Romney just got caught talking about 47 percent of Americans behind their backs.

The GOP presidential hopeful was captured in a video taken at a closed-door fundraiser attended by some 30 wealthy voters attacking “the 47 percent of people who will vote for the president no matter what”—the group (actually 46.4 percent of Americans) that doesn’t pay income tax. These are people who “believe they are entitled to health care, to food, to housing, to you-name-it,” he says. “I’ll never convince them they should take personal responsibility and care for their lives.”

So who exactly are these people “who believe the government has a responsibility to care for them?” Here, seven noteworthy facts about the 47 percent.

Most are taxpayers…The dangerous misconception of the 47 percent argument, according to Kevin Roose writing in New York magazine, Daily Kos’s Jed Lewison, and the Washington Post’s Brad Plummer, is that it is too often misinterpreted to mean that 47 percent of households pay no taxes at all, that they’re freeloaders. But the truth is that only 18.1 percent of households pay no tax—two thirds of the households that pay no income tax still pay payroll tax. (Many, says Plummer, actually pay it at higher rates than Romney.)

…And future income tax payers As Matthew Schmitz points out at First Things, in addition to most of the 47 percenters paying sales tax, property tax, and payroll tax, most of them also will begin paying income tax—the very thing Romney blasts them for not paying—within two years.

Many are elderlyJust over 10 percent of those paying no federal income tax are retired or elderly, according to the Tax Policy Center. As Roose at New York magazine points out, Social Security benefits aren’t considered taxable income, so if most or all of an elderly person’s income is from Social Security, he or she has no income tax to pay. “Romney is conflating the people who pay no net income tax with the people so dependent on government aid that they have to vote for Obama,” says David Weigel at Slate. “But these aren’t the same people!” In fact, elderly voters voted heavily Republican in the 2010 elections.

Many are poorOf the 47 percent of households that pay no income tax, nearly two thirds still pay payroll tax. Just about one third of those remaining households—the ones who pay neither income nor payroll tax—are the very poor, earning less than $20,000 each year. Those who in that lowest of income brackets pay no income tax through a combination of tax credits—specifically the earned income tax credit and the child credit—that, once applied, reduce their taxable income to zero, according to Tax Policy Center.

…Though a few are richWhile a majority of those who don’t pay income tax don’t do so because they are either elderly or don’t earn enough, there are “some exceptions to the old-or-poor rule,” says Roose. One big, rich exception: the roughly 3,000 members of the top 0.1 percent of taxpayers—they earned more than $2,178,866 in 2011—who paid no federal income tax because they were hedge-fund managers, real-estate investors, or wealthy financiers whose income is derived from capital gains, which are taxed at very low levels. When that rate is combined with a concept called “tax-loss carryforward,” which Roose says “allows an investor to use last year’s big loss to offset this year’s gains for tax purposes,” these top earners don’t have to pay federal income tax.

Many hail from conservative states Romney argues that the 47 percent he’s referring to in his sound bite will always vote for Obama, but, according to David A. Graham at The Atlantic, a disproportionate amount of those people actually reside in red states—which typically vote for Republican candidates. Of the 10 states with the highest percentage of people who pay no income tax, nine are red states.

Some are young people and students Accoring to The Hamilton Project, the 47 percent figure also wrongly includes younger individuals in their late teens and early 20s, many of whom are either unemployed or in school, and therefore have no tax liability. In recent years, as college graduates have struggled to find work, some of them are going back to graduate school, which the Project says has caused the number of young people who don’t pay taxes to rise.