The Mother Jones video of Mitt Romney telling his donors that the 47 percent of Americans who pay no income tax are entitled, dependent “victims” is consistent with the nominee’s preference for addressing inequality “in quiet rooms.” But this is no mere pander to wealthy Republican donors. In the Obama era, conservatives have fully embraced the notion that those who owe no federal income tax must have more “skin in the game.” That means raising income taxes on the bottom 47 percent of earners.
In August of last year, the Wall Street Journal labeled this soak-the-poor idea “the new Republican orthodoxy.” Indeed, Republican leaders, movement activists, and powerful conservative institutions have pushed for "skin in the game," for higher taxes on the bottom half of the income distribution.
WSJ: Increasing Taxes On Those So Poor They Don’t Owe Federal Income Tax Is “The New Republican Orthodoxy.” From the Wall Street Journal: “And [then-presidential candidate Jon Huntsman] agrees with the new Republican orthodoxy that the half of American households no longer paying income tax – mainly working poor families and seniors – should be brought onto the income tax rolls. ‘Marco Rubio was right when he said we don’t have enough people paying taxes in this country,’ he said, referring to the senator from Florida.” [Wall Street Journal, 8/21/11]
Heritage Foundation Portrayed Those Who Pay No Income Taxes As “The Non-Taxpaying Public” Who “Paid Nothing.” From the Heritage Foundation: “One of the most worrying trends in the Index [of Dependence on Government] is the coinciding growth in the non-taxpaying public. The percentage of people who do not pay federal income taxes, and who are not claimed as dependents by someone who does pay them, jumped from 14.8 percent in 1984 to 49.5 percent in 2009. This means that in 1984, 34.8 million tax filers paid no taxes; in 2009, 151.7 million paid nothing.” [Heritage.org, 2/8/12]
House Majority Leader Cantor Said “Everybody Should Have Some Skin In The Game, Even If It’s A Dollar.” During an appearance at Rice University, Rep. Eric Cantor (R-VA) said: “You speak about sort of the fairness issue in the tax code, and I agree that the tax code does not breed fair results. And we’ve got to look to see and make sure it’s a balanced approach. But right now what you have is almost I think almost 46, 47 percent of the people of this country don’t pay any income taxes. Now to me, I gotta ask, is that fair? I mean I think everybody should have some skin in the game, even if it’s a dollar, we ought to have people willing to make sure, or making sure that they’re part of what we’re trying to do.” [Cantor Remarks via YouTube.com, 11/10/11]
Conservative Activists Launched “We Are The 53 Percent” Site To Decry Americans Who Don’t Pay Income Taxes. From the Washington Post: “Conservative activists have created a Tumblr called ‘We are the 53 percent’ that’s meant to be a counterpunch to the viral ‘We are the 99 percent’ site that’s become a prominent symbol for the Occupy Wall Street movement. The Tumblr is supposed to represent the 53 percent of Americans who pay federal income taxes, and its assumption is that the Wall Street protesters are part of the 46 percent of the country who don’t. ‘We are the 53 percent’ was originally the brainchild of Erick Erickson, founder of RedState.org, who worked together with Josh Trevino, communications director for the right-leaning Texas Public Policy Foundation, and conservative filmmaker Mike Wilson to develop the site, according to Trevino. The overriding message is that the protesters have failed to take personal responsibility, blaming their economic troubles on others. ‘Suck it up you whiners. I am the 53 percent subsidizing you so you can hang out on Wall Street and complain,’ writes Erickson, in the Tumblr’s inaugural post.” [Washington Post, 10/10/11, emphasis added]
This new orthodoxy on the right is provocative, but it’s also based on an erroneous understanding of who pays which taxes. The Heritage Foundation likes to say this group “paid no taxes,” or “paid nothing.” In fact, most of them paid payroll taxes to the federal government, to say nothing of state and local taxes. (According to the Center on Budget and Policy Priorities, the poorest fifth of the country faces a combined effective rate of 16 percent.) And those payroll taxes conservatives paper over have been growing as a share of total federal revenue for six decades, largely replacing the shrinking contributions of corporate America.
Poorest 20 Percent Of Americans Pay 4 Percent Of Their Income To Federal Government, Face Overall Effective Tax Rate Of Over 16 Percent. From the Center on Budget and Policy Priorities: “Moreover, low-income households as a group do, in fact, pay federal taxes. Congressional Budget Office data show that the poorest fifth of households paid an average of 4.0 percent of their incomes in federal taxes in 2007, the latest year for which these data are available — not an insignificant amount given how modest these households’ incomes are; the poorest fifth of households had average income of $18,400 in 2007. The next-to-the bottom fifth — those with incomes between $20,500 and $34,300 in 2007 — paid an average of 10.6 percent of their incomes in federal taxes. […] When all federal, state, and local taxes are taken into account, the bottom fifth of households pays about 16 percent of their incomes in taxes, on average. The second-poorest fifth pays about 21 percent.”[CBPP.org, 9/17/11, emphasis original, internal citations removed]
- Reality: Data Shows That, At Most, 10 Percent Of Households Pay No Federal Taxes. From the New York Times: "Income taxes aren’t the only kind of federal taxes that people pay. There are also payroll taxes and investment taxes, among others. And, of course, people pay state and local taxes, too. Even if the discussion is restricted to federal taxes (for which the statistics are better), a vast majority of households end up paying federal taxes. Congressional Budget Office data suggests that, at most, about 10 percent of all households pay no net federal taxes. The number 10 is obviously a lot smaller than 47." [New York Times, 4/13/10]
For 60 Years, Payroll Taxes On Working People Have Increased And Corporate Taxes Have Decreased In Importance To Overall Federal Revenues. From the Urban Institute and Brookings Institution’s Tax Policy Center:
Changes in the shares of the various taxes in total federal revenue reflect these historical shifts. The individual income tax has consistently provided nearly half of total federal revenue since 1950, while other revenue sources have waxed and waned. Excise taxes brought in 19 percent of total revenue in 1950 but only about 3 percent in recent years. The share of revenue coming from the corporate income tax dropped from about one-third in the early 1950s to less than a tenth in 2010. In contrast, payroll taxes provided two-fifths of revenue in 2010, four times its one-tenth share in the early 1950s. [TaxPolicyCenter.org, 9/13/11]
Setting aside the problems with the “47 percent” statistic, who makes up the group that conservatives want to pay more? The nonpartisan Tax Policy Center tackled the question last summer, finding that nearly half are elderly and a third are working poor taking deductions for dependent children:
Of The 18 Percent Who Pay Neither Income Nor Payroll Taxes, 95 Percent Are Elderly Or Earn Less Than $20,000. From the Tax Policy Center:
[TaxPolicyCenter.org, accessed 9/18/12]