Happy tax day!

Today’s viral statistic is that the bottom 47% of Americans pay no income tax. You can’t turn on a radio or a TV, go online, or pick up a newspaper without this statistic staring you in the face, but what does it really mean?

According to the most recent U.S. Census figures, half of American households make less than $51,000 per year and nearly one third make less than $28,000 per year. A worker making $10-$12 per hour (the wage currently being negotiated by GM for its new hire auto workers) makes between $20,000 and $25,000 annually, or about $350 a week after withholding and before deductions for health insurance and 401K contributions.

Around here (Michigan) a modest two bedroom apartment costs $750 per month. That leaves our bottom half worker with about $100 TOTAL per week for groceries, gas, utilities, car insurance, medicine, school fees, and anything else that might come down the pike.

Subsidized, affordable housing has pretty much gone the way of the dinosaur, which means that some of these workers won’t be able to find good housing even for $750 per month. The only way to really make it on this kind of pay is to team up with lots of other workers under one roof, or pile up lots of unsecured debt to cover expenses, or both.

Usually both parents in a family have jobs or multiple jobs, and kids try to get jobs. So we’ve got families working all the time and not making it, and people in the press and on the street angry because those families don’t pay taxes. That makes no sense. Keep in mind that families and the working poor (often the same groups) DO pay payroll taxes, state taxes, social security taxes, and sales taxes.

Now contrast the plight of working famililes with the historical tax rates for the richest five per cent of Americans. In 1944 the marginal tax rate for the top 5% of wage earners was 94%. That kicked in right around $2.5 million. That meant that the richest people in 1944 America had to scrape by on $150,000 per year if they had no deductions. That’s a big chunk of taxes, but then, in 1944, $150,000 was still a heck of a lot of money. In fact even today only about 15% of the population makes that much or more.

Under Eisenhower the marginal rate for the top tier of earners dropped to 91%, then to 50% in the 70s, then 40% in the 90s, and currently rests at 35% thanks to the Bush tax cuts. Many huge multinational corporations—Exxon is one good example—pay NO income taxes in the U.S. Nada. Zip. (See clip at bottom of page.) Exxon does pay taxes to other nations. But not to ours.

This forty-seven per cent statistic is being floated today to pump up outrage at the working poor, but why? It seems the very rich are doing better and better without any of us at the bottom defending them. I hope today’s tax day is peaceful and passes uneventfully. I hope that maybe we can all begin to temper some of this free-floating outrage with common sense and factual information. I hope that American workers can be treated better and make more money, and soon.

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