Define Not Paying Taxes Please

Assertion: millions of Americans do not pay taxes...
Over and over again my conservative friends argue that a huge swath of lower-income Americans pay no taxes at all. This is one of their strongest arguments for tax cuts for the wealthy and cutting back on or eliminating social programs.

I take issue with this claim. For private-sector employees, Social Security and Medicare taxes are non-negotiable. With the exception of those subject to the Railroad Retirement Tax Act, which provides a separate system of contributions for railroad employees, Social Security taxes are deducted from every paycheck until the ceiling of $106,800 is reached - 4.2% for 2011, 6.2% for previous years. Medicare is deducted from every paycheck, period - 1.45%.

Self Employment Taxes
If you are self-employed, you pay the full shot of Social Security and Medicare (15.3% in 2010; 13,3% in 2011). You can deduct half of the Social Security payments from your Adjusted Gross Income. This does NOT exempt you from paying Social Security taxes. It does permit you to deduct the payments from your income subject to Federal Income Tax liability. In other words, you are allowed to "expense" that portion of Social Security that an employer would pay, just like other employers do.

The self-employed are allowed a deduction for what they pay for health insurance. This deduction is taken into consideration in calculating their net income from self employment. It is NOT deducted from their tax liability. Again, health insurance is treated as an "expense," as it would be by your employer if you worked for someone else.

So What?
Well, for every $100 dollars you earn, you pay $5.65 in employment taxes. Your employer pays $7.65 on that same $100. If you are self-employed, you pay $12.85 on every $100. Sounds like paying taxes to me.

Perhaps because I am a liberal elitist, it appears to me that accusing folks who pay these taxes of being lazy freeloading tax dodgers is disingenuous (dishonest).

Do I resent paying these taxes? Absolutely not. It is a price I am willing to pay for the safety net that has enabled my 88 year old mother-in-law and my 95 year old mother to retain their independence and which will (hopefully) enable me and my husband to avoid being burdens on our children in our elder years.

Note on Public-Sector Employees
Civil Service employees are exempt from Social Security Taxes because they have government pensions. Additionally, if you receive a pension from a government job in which you did not pay Social Security taxes, some or all of your Social Security spouse's, widow's or widower's benefits may be offset due to receipt of that pension. This offset is referred to as the Government Pension Offset, or GPO. For more information refer to: http://www.socialsecurity.gov/pubs/10007.html