Transcript: January 11, 2013

MARIA HINOJOSA: Welcome to Need to Know. Thanks for joining us. It’s great to be with you. If you take the time to read its mission statement, you’ll discover that the IRS pledges to apply tax law with “fairness to all.”

But what Americans continue to debate is whether the tax laws themselves are fair. Why, for instance, do one third of all Americans get to deduct all sorts of expenses from their tax bill while the other two-thirds end up taking just a single deduction known as the standard deduction?

Is that right? Is that fair? And another important question: do our tax policies boost economic growth – or slow it?

There is certainly no consensus about any of that in Washington. But lawmakers on both sides of the aisle do agree that the current tax code is a complicated mess that needs rethinking and reworking. How complicated is it? Well, we recently convinced four residents of New Jersey to share their 2010 tax returns with us and to talk to us about them. What emerged was a vivid picture of how some Americans – and not just rich Americans – benefit from the tax code far more than others. Need to Know’s Megan Thompson reports.

MEGAN THOMPSON [narration]: JENNIFER ROSADO WORKS FOR A LOCAL NONPROFIT IN CENTRAL NEW JERSEY. BUT SHE EARNS A LOW WAGE, AND AS A SINGLE MOTHER WITH TWO YOUNG KIDS, SHE SAYS IT’S DIFFICULT TO MAKE ENDS MEET.

JENNIFER ROSADO: It’s hard to struggle throughout a year. It’s hard to live paycheck to paycheck. It’s hard to say, “I can’t get this for my kids right now. Or I can’t do this.” People don’t want to be there.

MEGAN THOMPSON [narration]: ABOUT AN HOUR AWAY IN NORTH BERGEN, NEW JERSEY, DANIEL RANGEL EARNS A WORKING-CLASS WAGE AS AN ELECTRICIAN. HE DOESN’T HAVE KIDS, BUT SAYS HIS BUDGET IS STILL TIGHT.

DANNY RANGEL: Obviously I could be doing better. But– I’m– stretching my dollar.

MEGAN THOMPSON [narration]: IN NEW JERSEY’S STATE CAPITOL TRENTON, SETH HAHN IS DOING WELL FOR HIMSELF. HE EARNS AN UPPER-MIDDLE-CLASS INCOME AS A SENIOR STAFFER AT A LABOR UNION.

SETH HAHN: I feel pretty comfortable. I feel pretty fortunate in this economy that I have a job.

MEGAN THOMPSON [narration]: AND IN THE WEALTHY SUBURB OF FRANKLIN LAKES, NEW JERSEY, MULTI-MILLIONAIRE ERIC SCHOENBERG SITS IN ONE OF THE HIGHEST INCOME BRACKETS. A BUSINESS PROFESSOR AND ENTREPRENEUR, HE’S WEALTHY THANKS TO A LARGE INHERITANCE AND A FORMER CAREER ON WALL STREET.

ERIC SCHOENBERG: My wealth is– in the eight figures.

MEGAN THOMPSON: Safe to say that you’re one of the 1%?

ERIC SCHOENBERG: I would say I’m solidly within the 1% in terms of wealth.

MEGAN THOMPSON [narration]: EACH YEAR, LOW-WAGE EARNER JENNIFER ROSADO … WORKING-CLASS ELECTRICIAN DANIEL RANGEL … UPPER-MIDDLE-CLASS SETH HAHN …. AND MULTI-MILLIONAIRE ERIC SCHOENBERG FILE FOUR OF THE APPROXIMATELY 140 MILLION TAX RETURNS RECEIVED BY THE IRS.

MEGAN THOMPSON: Their returns not only look very different because of their wildly different incomes. They also offer a glimpse into the enormously complicated U.S. tax code… and how certain taxpayers benefit some say unfairly more than others because of a set of very particular and personal circumstances – from having kids, to owning a home, to living in a state with high taxes, to the way they earn their money.

MEGAN THOMPSON [narration]: IN 2010, JENNIFER ROSADO MADE JUST OVER $12,800 – BELOW THE POVERTY LINE FOR A FAMILY OF THREE – BUT BECAUSE SHE HAS TWO KIDS AND EARNED SO LITTLE, ROSADO’S TAXABLE INCOME WAS ZERO AND SHE ACTUALLY GOT A REFUND OF OVER $6,000 DUE TO TAX CREDITS WORTH FAR MORE THAN WHAT SHE OWED IN TAXES… A BIG BREAK FOR ROSADO, WHO ONCE LIVED IN A HOMELESS SHELTER.

JENNIFER ROSADO: When that income tax money comes back, it’s just like I can breathe a little bit.

MEGAN THOMPSON [narration]: ROSADO SAYS SHE STRETCHES HER 6000-DOLLAR REFUND OVER MOST OF THE YEAR TO SUPPLEMENT HER LOW WAGES.

JENNIFER ROSADO: I don’t have this money coming in every month. This is a one-time thing throughout the year. So I try to break it down and say, “Okay, what months am I struggling the most where it’s really getting hard for me? What happens?”

So my heat bill goes up in the winter. So I usually put money aside for that. And not have to worry about my heat getting shut off.

MEGAN THOMPSON [narration]: ROSADO’S BIGGEST BENEFIT – MORE THAN $5,000 DOLLARS – CAME FROM WHAT’S KNOWN AS THE EARNED INCOME TAX CREDIT. ALMOST 27 MILLION AMERICANS RECEIVE THIS CREDIT EACH YEAR…. BUT USUALLY ONLY IF THEY WORKED DURING THE YEAR AND THEIR INCOME WAS LOW ENOUGH. AND TAX FILERS WITH CHILDREN – LIKE ROSADO – GET MORE.

MEGAN THOMPSON: Part of what the earned income credit is supposed to do is encourage work. Do you agree with that? Do you think it does encourage work?

JENNIFER ROSADO: It does, yeah. Definitely—

MEGAN THOMPSON: How?

JENNIFER ROSADO: Only because it’s earned income. You need to have earned income to receive that credit.

MEGAN THOMPSON [narration]: BUT AT THE SAME TIME, ROSADO DIDN’T PAY ANY FEDERAL INCOME TAX.

MEGAN THOMPSON: There are some people in this country who criticize that. They say, “We all get the benefits of t– of tax revenues. We should all pitch in. We should all pay our fair share.” What do you say to that?

JENNIFER ROSADO: We got to look at those people that are literally one paycheck away from being back on the streets. And I’ve been there. And that’s not a good place to be. It’s just– it’s a security. It’s just financial security.

MEGAN THOMPSON [narration]: FINANCIAL SECURITY… A BIG BENEFIT FOR ROSADO…AND ALSO A BIG CONCERN FOR WORKING-CLASS ELECTRICIAN DANIEL RANGEL.

DANNY RANGEL: But the thing is, especially how times are right now– with food prices going up and pretty much everything going up– it’s—— it’s getting difficult to make ends meet.

MEGAN THOMPSON [narration]: IN 2010, RANGEL MADE LESS THAN 30,000, BUT HE PAID $1,380 IN TAX. SO WHY DID HE END UP ON THE HOOK FOR FEDERAL INCOME TAX, WHEN LOW-WAGE EARNER JENNIFER ROSADO GOT A $6000 REFUND? ONE BIG REASON IS THAT HE HAS NO KIDS.

MEGAN THOMPSON: We spoke to a single woman– who, like you, lives here in New Jersey. She has two kids. So she gets to claim two dependents on her tax return. For the last several years, has paid no federal income tax. But she’s gotten thousands of dollars back in refund. What do you think about that?

DANNY RANGEL: There are special cases where one may need assistance from the government. And– we can help out in those instances. I feel for people in her situation. You said she was a single mom. I feel for– in my– mom was a single mom.

MEGAN THOMPSON [narration]: RANGEL – A NAVY VETERAN – SAYS HE’S SYMPATHETIC TO LOW-WAGE EARNERS LIKE JENNIFER ROSADO BECAUSE HE GREW UP IN SIMILAR CIRCUMSTANCES. HE WAS RAISED BY HIS MOTHER, AN IMMIGRANT FROM CUBA IN A HOUSING PROJECT IN NEW YORK CITY. BUT RANGEL, WHO IS ACTIVE WITH THE TEA PARTY, SAYS HE HAS PHILOSOPHICAL CONCERNS ABOUT THE FEDERAL GOVERNMENT REDIRECTING MONEY FROM THE RICH TO THE POOR.

DANNY RANGEL: The problem that I have with that is is that– ultimately, when you really boil down to it– taking the two kids and taking’ all of the issues out of it, it’s– what it really is—— the redistribution of wealth. And the way I see it, it’s—- that’s now how– that’s not how America was built. That’s not how America operates.

MEGAN THOMPSON [narration]: RANGEL IS ALSO SKEPTICAL ABOUT WHETHER TAXPAYER DOLLARS ARE BEING WELL-SPENT.

DANNY RANGEL: But the thing is, we do have to take care of– our fellow citizens. You know, we do have to be– our brother’s keeper.

But the thing is, when– you have a system as big as the federal government– in charge of all these systems, there’s– gonna be waste. And it’s– in every, every program, whether it’s social, whether it’s military. It’s—- across the board.

DOROTHY BROWN: I’ll be teaching corporate tax at a tax policy center.

MEGAN THOMPSON [narration]: DOROTHY BROWN IS A LAW PROFESSOR AT EMORY UNIVERSITY IN ATLANTA AND A PROGRESSIVE TAX ANALYST.

MEGAN THOMPSON: So if there’s a low income earner who doesn’t have kids they’re going to see much less of a benefit from these things if– and maybe no benefit at all. Is that fair?

DOROTHY BROWN: One of the greatest benefits of the Earned Income Tax Credit is the number of children lifted out of poverty as a result of it.

So there’s an argument that we’ve got limited dollars to go around. Where do we want to spend this credit? You want to spend it with families with children.

STEPHEN MOORE: The one thing I like a lot about the earned income tax credit is that you only get the earned income tax credit if you work

MEGAN THOMPSON [narration]: CONSERVATIVE STEPHEN MOORE IS A SENIOR ECONOMICS WRITER FOR THE WALL STREET JOURNAL AND THE AUTHOR OF THE NEW BOOK, ‘WHO’S THE FAIREST OF THEM ALL?’

STEPHEN MOORE: One of the problems I have with our spending programs, our welfare programs like food stamps, unemployment insurance, which are, you know, growing tremendously in cost is there’s no work requirement. There’s nothing… were not asking someone in return to give anything in return to society for getting these benefits.

MEGAN THOMPSON: Those benefits, and low-income earners like Jennifer Rosado – became an issue during last year’s presidential campaign when Mitt Romney made his now-famous comment about “the 47 percent” – a reference to the number of Americans who don’t pay any federal income tax.

MITT ROMNEY: There are 47% who are with him, who are dependent upon government, who believe that they are victims, who believe that government has a responsibility to care for them.

STEPHEN MOORE: I believe that anybody who is a voter in this country, anybody who is a citizen and anyone who’s a worker, should pay some federal income tax. Some. Even if it’s just $100. Because I think everybody should have some stake in the system.

And when you have, right now, about 4 out of 10 Americans who when they fill out their 1040 forms and all of the other forms they pay zero, yea, I think that’s a problem.

MEGAN THOMPSON: How is that fair? A lot of people look at that and they say, and they see the fact that half the people in this country aren’t paying a federal income tax. And they say, “That’s not fair.”

DOROTHY BROWN: The notion of low income taxpayers– low income workers not paying taxes does not comport with reality.

MEGAN THOMPSON [narration]: IN FACT, BROWN SAYS ALL THE FOCUS ON TAX BREAKS FOR THE POOR OBSCURES A BIGGER POINT. THESE PEOPLE ARE PAYING PLENTY OF OTHER FEDERAL TAXES, LIKE MEDICARE AND SOCIAL SECURITY.

THOSE TAXES AMOUNTED TO NEARLY $1,000 FOR LOW-WAGE EARNER JENNIFER ROSADO … AND MORE THAN $2000 FOR WORKING-CLASS ELECTRICIAN DANIEL RANGEL.

DOROTHY BROWN: Every April 15, newspapers talk about the 47% of taxpayers who don’t pay any income taxes. Now, the better stories talk about social security taxes, gas taxes, excise taxes, and the other taxes that low income workers’ pay. So it’s a complicated picture and—- 47% dependent sound bite is an– inaccurate picture of it.

MEGAN THOMPSON [narration]: BUT BECAUSE ALMOST HALF OF ALL AMERICANS PAY NO INCOME TAX, THE OVERALL BURDEN FALLS OVERWHELMINGLY ON THE MORE AFFLUENT.

IN FACT, AS CONSERVATIVE STEPHEN MOORE POINTS OUT, THOSE MAKING MORE THAN ABOUT $370,000 – THE TOP ONE PERCENT — PAY ALMOST 40 PERCENT OF ALL FEDERAL INCOME TAX … AND THOSE MAKING MORE THAN ABOUT $116,000– THE TOP TEN PERCENT – PAY AROUND 70 PERCENT.

STEPHEN MOORE: I mean I think this is important to understand: no matter whether you’re a liberal or conservative or republican or democrat we should understand the basic facts of the tax system. And for all the talk about the rich not paying their fair share. I mean the truth is that 1 out of 100 pay 40 cents on every dollar that’s raised. That’s a pretty progressive tax system.

MEGAN THOMPSON [narration]: THAT MAY BE. BUT THAT SAME GROUP OF AFFLUENT AMERICANS DO GAIN FROM SOME OF THE BIGGEST BENEFITS, WHICH MAKE UP THE BULK OF THE NEARLY $1.1 TRILLION DOLLARS WORTH OF BREAKS IN THE U.S. TAX CODE.

THINGS LIKE THE MORTGAGE INTEREST DEDUCTION, WORTH ABOUT 72 BILLION DOLLARS IN 2011, THE CHARITABLE DONATION DEDUCTION, WORTH ABOUT 34 BILLION DOLLARS, AND THE STATE AND LOCAL TAX DEDUCTION, WORTH ABOUT 64 BILLION DOLLARS.

BUT JUST AS THERE ARE MAJOR DIFFERENCES IN THE BENEFITS PAID TO LOWER-WAGE EARNERS. THERE ARE ALSO HUGE DISCREPANCIES BETWEEN WHAT THE WELL-OFF AND THE VERY RICH PAY.

IN FACT, SETH HAHN, WHO EARNS AN UPPER-MIDDLE WAGE AS A UNION STAFFER, ACTUALLY PAYS MORE PROPORTIONALLY – IN FEDERAL INCOME TAXES THAN MULTIMILLIONAIRE ERIC SCHOENBERG. IN 2010, HAHN EARNED ABOUT $84,000 DOLLARS AND PAID $14,925 DOLLARS IN FEDERAL INCOME TAX.

MEGAN THOMPSON: Okay– do you own a home, or are you a renter?

SETH HAHN: We rent– an apartment right now.

MEGAN THOMPSON: Okay. So there’s no mortgage interest deduction that you’re taking on your tax returns?

SETH HAHN: Right. That’s correct.

MEGAN THOMPSON: Did you make charitable contributions in 2010 that you could deduct from your taxes?

SETH HAHN: If I did, I didn’t deduct anything on my taxes.

MEGAN THOMPSON: How about state and local taxes?

SETH HAHN: I did just the standard deduction in 2010 and didn’t deduct any state or local taxes.

SETH HAHN: There are– lots of deductions that I– that– that were not available to me in 2010.

MEGAN THOMPSON: For someone who has an income in the middle, whose single, no kids, rents, what does the tax code do for that person?

DOROTHY BROWN: The tax code, I would say, comes for that person early and often. And that person should want tax reform that gets our rates lowered. Two-thirds of Americans do not itemize deductions. So we don’t care what deductions and loopholes there are because we use the standard deduction.

MEGAN THOMPSON: So—- two-thirds of Americans can’t or don’t take advantage of these deductions.

DOROTHY BROWN: Correct.

MEGAN THOMPSON: Who is this one-third of Americans who can?

DOROTHY BROWN: The higher income the more likely you are to itemize and the more likely you are to get significant benefits out of itemized deductions.

MEGAN THOMPSON [narration]: HIGHER INCOME TAXPAYERS, LIKE ERIC SCHOENBERG.

ERIC SCHOENBERG: I do take a substantial total number of deductions.

MEGAN THOMPSON [narration]: IN 2010, SCHOENBERG EARNED NEARLY $725,000. BUT JUST GOING BY THE BOOK, HE WAS ABLE TO DEDUCT MORE THAN $160,000. THIS INCLUDED MORE THAN $42,000 FOR NEW JERSEY’S HIGH STATE AND LOCAL TAXES, AND ALMOST $68,000 IN GIFTS TO CHARITY. SCHOENBERG HAS PAID OFF HIS HOUSE, BUT FOR MANY YEARS TOOK A DEDUCTION FOR INTEREST PAID ON HIS MORTGAGE.

MEGAN THOMPSON: Schoenberg’s tax return is not unique. In fact, affluent taxpayers receive the vast majority of the benefits from deductions. In 2011, the overwhelming percentage of gains from the mortgage interest deduction, the charitable donation deduction and the state and local tax deduction all went to taxpayers making more than 100,000 dollars a year.

DOROTHY BROWN: Those that earn the highest income get the most benefit from tax deductions. And those that earn the lowest incomes or lower income amounts get the least benefit, so it’s upside down.

MEGAN THOMPSON [narration]: BUT ONE OF SCHOENBERG’S BIGGEST BREAKS DIDN’T COME FROM ANY DEDUCTION. IT CAME FROM HOW HE EARNED HIS MONEY.

ERIC SCHOENBERG: In 2010– of that $724,000, about $51,000 was from wages and salaries. So this would’ve been earnings from my teaching.

MEGAN THOMPSON [narration]: WAGES AND SALARIES WERE SUBJECT TO INCOME TAX RATES THAT, UNTIL THIS MONTH, TOPPED OUT AT 35%.

ERIC SCHOENBERG: The single biggest category– which is typically the case for me, was capital gains. I had $404,000 in capital gains in 2010.

Do you think you’re going to be happier if you become rich?

MEGAN THOMPSON [narration]: THAT CAPITAL GAINS INCOME WAS TAXED AT A MUCH LOWER RATE OF 15%. AND BECAUSE INVESTMENT INCOME – NOT WAGES FROM A JOB — MADE UP THE BULK OF SCHOENBERG’S EARNINGS, HIS EFFECTIVE TAX RATE – THE OVERALL PERCENTAGE IN TAXES HE PAID – WAS ONLY 15.9 PERCENT. BUT REMEMBER SETH HAHN, WHO EARNED ALL HIS $84,000 FROM HIS JOB. HE PAID AN EFFECTIVE TAX RATE OF 17.7 PERCENT.

MEGAN THOMPSON: This guy makes eight times the amount that you make, and he’s paying a lower effective tax rate than you. What do you think about that?

SETH HAHN: It– it’s– she– really sort of outrageous that it’s happening. And it’s really sort of outrageous that our elected leaders allow it to continue to happen. The people who are reaping all of the benefits of the wealth that we are sort of collectively creating are those who are paying, often, the least in taxes. And I think that’s– a really unfair way of going about doing things.

MEGAN THOMPSON: And remember those social security taxes? They just went up by two percent. Low-income earner Jennifer Rosado, working-class Daniel Rangel and upper-middle-class Seth Hahn pay them on everything they earn at their jobs. And while multi-millionaire Eric Schoenberg also pays them on the income he makes from his teaching, the hundreds of thousands of dollars he earns from his investments aren’t subject to any of those taxes.

DOROTHY BROWN: We have two tax systems in America. One is progressive and I say that applies to most of us who are wage earners. And one is a flat rate which is a 15% tax on income from stock and dividends, a capital gains tax rate. If the richest among us pay the lowest tax rates, something’s wrong with this picture.

MEGAN THOMPSON [narration]: AS PART OF THE FISCAL CLIFF DEAL EARLIER THIS MONTH, TAXES ON INVESTMENT INCOME – LOWERED UNDER PRESIDENT GEORGE W BUSH TO 15 PERCENT IN 2003 – WERE RAISED TO 20 PERCENT FOR UPPER-INCOME HOUSEHOLDS. A NEW 3.8 PERCENT TAX ON INVESTMENTS WILL ALSO KICK IN THIS YEAR FOR HIGH EARNERS, BECAUSE OF THE AFFORDABLE CARE ACT. BUT CONSERVATIVE STEPHEN MOORE BELIEVES THIS IS THE WRONG ANSWER.

STEPHEN MOORE: One of the problems that I have with our current tax system is that we actually tax the kind of behavior that we want. We want people to save, we want people to invest in new companies and new equipment and to hire workers and I think we have a punitive system when it comes to that kind of virtuous behavior that creates growth.

MEGAN THOMPSON: So some people argue that if you raise rates on investment income you’re going to disincentive savings and investment and capital formation. What do you say?

DOROTHY BROWN: I say okay, we tried it your way, Bush tax cuts, lowest capital gains rate ever. Where are the jobs? Where’s the investment? Where’s the capital? It hasn’t worked out, so now let’s try something different.

MEGAN THOMPSON: IN FACT, THE COUNTRY IS ABOUT TO TRY SOMETHING DIFFERENT. UNDER THE DEAL STRUCK EARLIER THIS MONTH, TAX DEDUCTIONS AND CREDITS WILL BE LIMITED FOR THOSE EARNING AT LEAST 250,000 DOLLARS A YEAR. AND TAX RATES WILL RISE ON INCOME ABOVE 400,000 DOLLARS A YEAR.

STEPHEN MOORE: I think it’s a really bad idea right now to be raising marginal tax rates, especially at the people at the top. Because you have to understand, what do those people do. Those people in the top 2 or 3 percent that the president talks about those are the people who create the jobs.

MEGAN THOMPSON [narration]: DANIEL RANGEL – WHO EARNED A WORKING-CLASS WAGE OF LESS THAN $30,000 ISN’T AFFECTED BY ANY OF THIS. BUT AS A MEMBER OF THE TEA PARTY HE ALSO DOESN’T WANT TO SEE TAXES GO UP ON THE WEALTHY.

DANNY RANGEL: Once you go down the road where you going to raise the tax rate on the higher income–I feel that you take the incentive of– a person becoming– a part of that tax bracket– becoming rich. And because there– there’s– n– there’s nothing wrong with the capitalist system. If you continue to– only attack the rich only to try to– redistribute the wealth from the rich– there’s not enough rich people in the world in order to redistribute the wealth to everybody else, so everybody’s equal. It’s just– you know, it’s simple math.

MEGAN THOMPSON [narration]: BUT SURPRISINGLY, MILLIONAIRE ERIC SCHOENBERG DOESN’T SEE IT THAT WAY. HE’S BECOME SOMETHING OF A TAX ACTIVIST, WHICH IS WHY HE SHARED SUCH PERSONAL FINANCIAL INFORMATION WITH US.

ERIC SCHOENBERG: I think it’s perfectly reasonable that the wealthy, who I believe, in the end, benefit the most from having a society that works for everybody, should be contributing more.

MEGAN THOMPSON: So you think that you should pay more in taxes.

ERIC SCHOENBERG: I absolutely think I should pay more in taxes.

MEGAN THOMPSON: Even though you paid $115,000 in taxes in 2010.

ERIC SCHOENBERG: Well, if you added up what I’ve paid in taxes over the years, it would be a lot more than that.

MEGAN THOMPSON: Even still, you would like to pay more.

ERIC SCHOENBERG: I would. “Why should we have these differential rates between earnings from income and earnings from capital?” It’s– the– hardworking individual who goes out to get money for their labor that we really ought to be rewarding. Isn’t that the person that we really feel is contributing the most to society? You know, why is it that we think what the venture capitalist does is more important than what the teacher does?

MEGAN THOMPSON [narration]: ALTHOUGH SCHOENBERG’S INCOME VARIES WIDELY FROM YEAR TO YEAR, IT’S UNLIKELY THAT MANY OF THE CHANGES FROM THIS MONTH’S DEAL WILL DRAMATICALLY AFFECT HIM. THEY WON’T AFFECT SETH HAHN EITHER, BUT HE DID GET MARRIED LAST YEAR AND THAT COULD LEAD TO NEW DEDUCTIONS DOWN THE ROAD.

MEGAN THOMPSON: You’re doing well for yourself, and you may someday want to buy a house or have a child. Are any of these deductions incentives for you to do any of those things?

SETH HAHN: I– we will probably make decisions about whether or not to have children independent of the tax write-off. And, you know, we will look at– buying a home when it’s right for us and our career. And, honestly, the—- tax write-off discussion has not even entered into it.

MEGAN THOMPSON [narration]: AS FOR JENNIFER ROSADO, SHE WENT BACK TO SCHOOL AND TOOK A SECOND JOB. AND THIS ONCE HOMELESS WOMAN’S INCOME HAS SOARED FROM $12,800 IN 2010 TO AROUND $35,000 TODAY. SHE BELIEVES GETTING THE EARNED INCOME TAX CREDIT HELPED HER GET BACK ON HER FEET.

NAT: Hey everybody!

MEGAN THOMPSON [narration]: NOWADAYS, ROSADO WORKS WITH A TEAM TO PROVIDE FREE TAX PREPARATION FOR LOW-INCOME EARNERS IN CENTRAL NEW JERSEY, TRYING TO GET THE WORD OUT ABOUT BENEFITS AVAILABLE TO THEM, LIKE THE EARNED INCOME TAX CREDIT.

JENNIFER ROSADO: If you don’t know about it, you need to get it, if you haven’t gotten it, you’re able to go back up three years and receive it. And it’s worth it. It’s definitely worth it.

MARIA HINOJOSA [narration]: THIS WEEK ONLINE TAKE PART IN OUR WEEKLY POLL. THE TOPIC: WHO WINS WHEN IT COMES TO TAXES? AND, DON’T KNOW YOUR CAPITAL GAINS FROM YOUR EARNED INCOME TAX CREDIT? USE NEED TO KNOW’S TAX GLOSSARY. VISIT PBS.ORG/NEED TO KNOW.

MARIA HINOJOSA: That’s it for this edition of Need to Know. On our next edition… solving the paralysis that grips Washington DC.

SOT: Forty seven different permits from 19 different government entities. All of these requirements can’t be avoided because the law requires you to go through these studies and requirements even if they have no possible impact.

MARIA HINOJOSA: Jeff Greenfield will be with you then. I’m Maria Hinojosa. Thanks for watching.

 

 

 
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Comments

  • chrisco

    I don’t understand how you can ignore Social Security tax and talk about Federal Income tax only when comparing Hahn and Schoenberg. They are all Federal Taxes so it is quite arbitrary not to include payroll taxes as well. You really minimize the unfairness instead of exposing it. Every penny Hahn made was subject to payroll taxes whereas well under less than 10% of Schoenberg’s was (apparently).

    So if Hahn’s federal INCOME tax rate was 17.7% you have to add about 5.5% (which deducts the 2% payroll tax cut under Obama) so his federal tax burden is over 23%.

  • Karen

    The bottom line with Seth Hahn and Eric Schoenberg is that both paid very close to the same percentage of income taxes (17.7% and 15.9%) which should be the mark of what is fair or not. Your report stated that Mr. Schoenberg was able to take $68,000 in charitable deductions (which means he actually gave away to others 20-50% more than that because of limitations in the % you can deduct from your total giving). However, Mr. Hahn stated that if he did give any money away, he chose not to take advantage of the tax deduction. Mr. Hahn also chose to rent rather than buy a home ( which means he is throwing away a lot of money every month instead investing it in property. You should have emphasized that Mr. Schoenberg may make 8.63% times more than Mr. Hahn; but he also paid 7.71% more in federal taxes than Mr. Hahn. I believe this part of your report was misleading especially when you quoted Mr. Hahn stating that “they [the richer ones] are paying the least in taxes and I think that’s a really unfair way of going about doing things. Really? Paying 7.71% more in federal taxes than you are is unfair r. Hahn? To whom? By the way, I am one of the very lower middle class that takes advantage of our tax system by buying my home as an investment, giving 23% of my income to charity, and itemizing every deduction I can qualify for. Yes, it takes time to do the long form and I have to keep up with my receipts. But I believe it is worth it.

  • Late viewer

    Was there no mention of Alternative Minimum Tax? Shouldn’t it have caused Mr. Schoenberg’s effective tax rate to be higher?