Thursday, May 18, 2006

Denny A-Tax Working Families

Think Progress reports that Denny Hastert, who gets a fat annual salary of $212,010, had this to say about working-class families:
Well, folks, if you earn $40,000 a year and have a family of two children, you don’t pay any taxes. So you probably, if you don’t pay any taxes, you are not going to get a very big tax cut.
It is important to remember that the federal income tax is only one of several taxes that people pay. Other taxes, like excise taxes, sales taxes, and especially the payroll tax (a.k.a. FICA), are regressive — that is, the poor pay them at a higher rate relative to their income than do the non-poor.

Just because somebody does not pay any federal income tax does not mean that they "don't pay any taxes” or even that they pay a smaller percentage of their income in taxes than someone who does pay federal income tax. This is because employees and their employers must each pay 7.65 percent in payroll taxes — a combined 15.3 percent that never makes it from the employer to the employee — on top of their income taxes. Millionaires, by contrast, pay a maximum rate of just 15 percent on their income from capital gains and dividends.

Clearly, Denny has forgotten all about payroll taxes -- but that is what happens when you don't mix with people who work for a living.

Watch Denny tell-off wage workers here.

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