I have this image that Im laying atop another image. They are both gifs. Im using the eraser tool to erase at 47% the image to make it transparent but, above 50% its 100% and below 50% its 0% transparent.

Gif only allows full transparency or full opacity.
If you want to have any other values for transparency than 0% or 100%, you need to use a different file format (e.g. png). Also, as already mentioned by others, make sure the image is in RGB mode.

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