PITTSBURGH (KDKA) — When Mitt Romney said 47 percent of Americans don’t pay federal income tax, he was right.
“Technically he is correct,” says Robert Dammon, dean of Carnegie Mellon University’s Tepper School of Business. “Nearly one in every of two households in the U.S. pay no federal income tax.”
But that doesn’t make them wards of the state or the other taxpayers, says Dammon.
“That doesn’t make them dependent on government. It simply means that they’re not sending any of their earned income to the federal government.”
And why not?
“Either because they have incomes that are too low,” adds Dammon, “or deductions that reduce their taxable income to zero, or they have income such as Social Security that may not be subject to taxation.”
According to the Brookings Institution’s Tax Policy Center, the largest groups who don’t pay federal income taxes are senior citizens and retirees followed by families with children and the working poor, those with education credits and those with lots of itemized deductions.
And many have paid taxes in the past, especially seniors.
“They paid taxes along the way as they were working,” says Dammon.
Gene Sperling, the director of the National Economic Council, was in town speaking to Carnegie Mellon University students.
He says, low wage earners do contribute to the economy, even if they don’t pay federal income taxes.
“They’re paying payroll taxes, they’re paying state taxes, they’re paying gas taxes, but more importantly, they’re contributing. They’re contributing to our economy in an enormous number of ways.”