Counterparties: Revenge of the lucky dukies

September 18, 2012

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Mitt Romney is defending his comments in an anonymously sourced video, taken surreptitiously at a Florida fundraiser, that “there are 47 percent of the people who will vote for the president no matter what… These are people who pay no income tax”. Which is odd, because Romney’s take on “the 47%” was factually wrong and politically daft.

It is true, according to the Tax Policy Center, that 46% of American taxpayers pay no federal income taxes — the so-called lucky duckies. They do, however, pay taxes like “federal payroll and excise taxes as well as state and local income, sales, and property taxes”. A combination of poverty and tax breaks for children, the elderly and the working poor account for 87.2% of cases where zero federal income taxes are paid, something Ronald Reagan bragged about. Awkwardly for Romney, there’s also a small slice of high-earning taxpayers who pay no federal income tax due to the treatment of capital gains and dividends. NPR’s Planet Money has a great graph that simplifies the breakdown. The reality is that America’s tax system is barely progressive and in effect approaches a flat tax.

Politically, the Atlantic‘s David Graham shows the non-federal taxpayers live largely in Southern and Western states Romney must win. And Graham’s colleague Derek Thompson notes that Obama won a huge share of low-income voters in those states, the president was less successful with elderly Southerners. Romney will need their support in November.

Dismissing nearly half of Americans as unreachable and unworthy struck Jonathan Chait as exactly what we’d been waiting to see: the real Mitt Romney. He turned out to be a “sneering plutocrat” who thinks of the “lowest-earning half of the population as implacably hostile parasites”. As the Huffington Post’s Ryan Grim and Matt Sledge put it in cataloging the wide-ranging negative reaction to Romney’s comments — which also disgusted David Brooks — that’s a stance that “offends liberals and conservatives alike”. — Ben Walsh

On to today’s links:

The Einhorn Effect: A mere mention can send a stock down 13% in a month – WSJ

New Normal
Debt collectors are now using district attorneys’ stationery to threaten you with jail time – NYT

Paul Ryan’s probably not telling the truth about having the same body fat levels as world-class sprinters – Slate

The importance of Occupy: It changed the conversation (among other things) – Felix
“Rarely can a movement have been so hastily obituarised as Occupy Wall Street” – Guardian

EU Mess
Europe’s too-big-to-fail banks now even too-big-to-fail-ier – Bloomberg
Berlin’s 168 billion euro problem with the EU bailout fund – Der Spiegel
The head of Germany’s central bank says the ECB kinda reminds him of the devil in Faust – Telegraph

“Letter to Rupert Murdoch regarding burglary”: Absolutely scathing note from MP Tom Watson – Tom Watson

Long Reads
The giant medical company that ran illegal, deadly bone-cement tests on humans – Fortune

There’s a 15% chance that the US goes off the fiscal cliff and wrecks the economy – Moody’s

Ramesh Ponnuru on why the GOP has the entitlement issue all wrong – Bloomberg

“Hot Money”
Becoming a less-effective tax shelter will cost Switzerland $65 billion in deposits – FT

Financial Arcana
Russia agrees to a 90% haircut on $11 billion in Soviet-era loans to North Korea – WSJ

Math explains why you’re less popular than your friends – Scientific American


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