Yes, the poor do pay taxes (and eight other myths debunked)

Just in time for tax day, Pulitzer-prize winning reporter, author and lecturer David Cay Johnston takes on what he calls nine “media-perpetuated tax myths” that prop up the theory of supply-side economics–the notion that lower tax rates promote investment, which creates jobs, which raises tax revenue.

No. 1 on his list: The widespread notion that the poor don’t pay taxes. They do, Johnston says in an article published in Willamette Week and about 40 other weeklies. They may pay little or nothing in income taxes, he says, but they put at least as great a share of their wages into payroll taxes as wealthier earners. And in almost every state, state and local taxes take a larger proportion of income from the poor than from the rich.

Nor do the wealthy pay the bulk of taxes in this country, Johnston says. While the oft-cited statistic that the wealthiest 1 percent of earners pay 38 percent of income taxes (as of 2008) is true, he says, “people forget that the income tax is less than half of federal taxes and only one-fifth of taxes at all levels of government.”

As Americans consider the three decades of supply-side economics ushered in by the Reagan Administration, Johnston says, they should “keep in mind George Washington. When he fell ill his doctors followed the common wisdom of the era. They cut him and bled him to remove bad blood. As Washington’s condition grew worse, they bled him more. And like the mantra of tax cuts for the rich, they kept applying the same treatment until they killed him.”