Tax the poor, protect the rich?

Republicans complain about half of America not paying income taxes: the new 'welfare' canard

August 21, 2011|Dan Rodricks

"Thank God for Ronald Reagan!" I heard a successful restaurateur cheer one night in 1986, as he surveyed the people standing in line to get into his place in Baltimore's Little Italy. "If the Democrats were running the show, half the damn country would be on welfare."

That was a standard theme of the era: The country had been going to hell because of "welfare." The Democrats' Great Society had spawned an expensive "welfare state," Reaganites argued, with too many lazy Americans on the dole. Ronald Reagan was king of the welfare queen anecdote, and he had used such stories to call for "personal responsibility" and the dismantling of social programs.

With reforms a decade later, welfare went away as an issue. American women can no longer stay on public assistance indefinitely, so it's rare that you hear conservatives use the term. "Welfare state" morphed into "nanny state" as libertarian conservatives decried government regulation and touted the wonders of the free market.

Now it appears that "welfare" is making a comeback as a political issue, though you still won't hear the term used.

What you'll hear is: "Half the people in this country pay no taxes."

You're likely to hear that from a relative or friend who gets his (inaccurate) talking points from Rush Limbaugh and Sean Hannity. Or you might hear it from a Republican politician. Presidential candidates Mitt Romney, Michele Bachmann and the new guy, Texas Gov. Rick Perry, have all made this complaint — that half of the households in the United States do not pay income taxes.

It's a way of saying that half the country is on the dole.

The new guy, Mr. Perry, brought it up while preaching on "personal responsibility" in Iowa last week. "We're approaching nearly half of the United States population that doesn't pay any income taxes," he's heard to say in a YouTube video. He said he wanted to see more Americans "outside the wagon pulling."

Other conservatives relish making this point — to counter the arguments, made by billionaire Warren Buffett and President Barack Obama, that the nation's wealthiest need to pay more to help reduce the federal budget deficits and the nation's debt.

So, here's what we have:

Republicans who oppose taxing the nation's wealthiest at higher rates saying it might be time to start taxing the working poor and elderly.

After all, those are the very groups that don't pay income taxes.

According to a new report from the nonpartisan Tax Policy Center in Washington, about 46 percent of American "tax units" — don't you love wonk jargon? — will not pay any income taxes in 2011. (They will, of course, pay state and local taxes and sales taxes, and many will pay payroll taxes.)

There are good reasons for the "nontaxable" status of so many Americans. Some are so poor, they avoid liability under standard income tax provisions. (About 44 million Americans were living below the government-set poverty line by 2009, according to census figures.)

Forty-four percent of "tax units made nontaxable by tax expenditures" are elderly citizens living on benefits and taking the credits they are allowed under the tax code because of age and income.

Another 33 percent receive credits for being among the working poor and for having children.

Some of the rest of the "tax units made nontaxable by tax expenditures" make higher salaries but use education and various other credits and deductions to avoid tax liability.

But the majority of our "freeloading" households have incomes of $40,000 a year or far, far less.

And yet Republicans suggest that they need to pay "their fair share." Mitt Romney made the point recently in New Hampshire, according to The Wall Street Journal, and Ms. Bachmann told a crowd in South Carolina in July:

"Part of the problem is today, only 53 percent pay any federal income tax at all; 47 percent pay nothing. We need to broaden the base so that everybody pays something, even if it's a dollar."

How can Ms. Bachmann raise her hand and pledge to not raise taxes, then even suggest raising them for any group?

And how can anyone with half a brain, or half a heart, want to take more — even one dollar more — from those who have so little while protecting those who have so much?

Dan Rodricks' column appears Tuesdays, Thursdays and Sundays. He is the host of Midday on WYPR 88.1 FM. Email: dan.rodricks@baltsun.com. Facebook: http://www.facebook.com/dan.rodricks

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