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New Resentment of the poor

Posted by on Sep. 2, 2011 at 3:14 PM
  • 6 Replies

The New Resentment of the Poor

Published: August 30, 2011

In a decade of frenzied tax-cutting for the rich, the Republican Party just happened to lower tax rates for the poor, as well. Now several of the party's most prominent presidential candidates and lawmakers want to correct that oversight and raise taxes on the poor and the working class, while protecting the rich, of course.

These Republican leaders, who think nothing of widening tax loopholes for corporations and multimillion-dollar estates, are offended by the idea that people making less than $40,000 might benefit from the progressive tax code. They are infuriated by the earned income tax credit (the pride of Ronald Reagan), which has become the biggest and most effective antipoverty program by giving working families thousands of dollars a year in tax refunds. They scoff at continuing President Obama's payroll tax cut, which is tilted toward low- and middle-income workers and expires in December.

Until fairly recently, Republicans, at least, have been fairly consistent in their position that tax cuts should benefit everyone. Though the Bush tax cuts were primarily for the rich, they did lower rates for almost all taxpayers, providing a veneer of egalitarianism. Then the recession pushed down incomes severely, many below the minimum income tax level, and the stimulus act lowered that level further with new tax cuts. The number of families not paying income tax has risen from about 30 percent before the recession to about half, and, suddenly, Republicans have a new tool to stoke class resentment.

Representative Michele Bachmann noted recently that 47 percent of Americans do not pay federal income tax; all of them, she said, should pay something because they benefit from parks, roads and national security. (Interesting that she acknowledged government has a purpose.) Gov. Rick Perry, in the announcement of his candidacy, said he was dismayed at the "injustice" that nearly half of Americans do not pay income tax. Jon Huntsman Jr., up to now the most reasonable in the Republican presidential field, said not enough Americans pay tax.

Representative Eric Cantor, the House majority leader, and several senators have made similar arguments, variations of the idea expressed earlier by Senator Dan Coats of Indiana that "everyone needs to have some skin in the game."

This is factually wrong, economically wrong and morally wrong. First, the facts: a vast majority of Americans have skin in the tax game. Even if they earn too little to qualify for the income tax, they pay payroll taxes (which Republicans want to raise), gasoline excise taxes and state and local taxes. Only 14 percent of households pay neither income nor payroll taxes, according to the Tax Policy Center at the Brookings Institution. The poorest fifth paid an average of 16.3 percent of income in taxes in 2010.

Economically, reducing the earned income tax credit and the child tax credit - which would be required if everyone paid income taxes - makes no sense at a time of high unemployment. The credits, which only go to working people, have always been a strong incentive to work, as even some conservative economists say, and have increased the labor force while reducing the welfare rolls.

The moral argument would have been obvious before this polarized year. Nearly 90 percent of the families that paid no income tax make less than $40,000, most much less. The real problem is that so many Americans are struggling on such a small income, not whether they pay taxes. The two tax credits lifted 7.2 million people out of poverty in 2009, including four million children. At a time when high-income households are paying their lowest share of federal taxes in decades, when corporations frequently avoid paying any tax, it is clear who should bear a larger burden and who should not.

 
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by on Sep. 2, 2011 at 3:14 PM
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Replies (1-6):
jltplk25
by Gold Member on Sep. 2, 2011 at 4:49 PM

I'm in a politcal mood today. :)

mrsnoble2004
by on Sep. 2, 2011 at 8:24 PM

interesting, does this mean a bigger tax refund check if you make under $40,000?

jltplk25
by Gold Member on Sep. 2, 2011 at 9:14 PM

To be honest I'm not sure. What I took from it might not even be right but it seems like the Republican Party seems to think that the poor people aren't paying their taxes when in fact they are. Some just so happen to make an amount that isn't even taxable for income but they pay payroll taxes, state and local taxes.

Pammi86
by Pamela on Sep. 3, 2011 at 12:45 AM

interesting...

armywife1229
by on Sep. 3, 2011 at 8:16 AM

What news outlet did this come from?

jltplk25
by Gold Member on Sep. 3, 2011 at 9:48 AM
It's an editorial from the ny times. I usually post the links to articles I find but this one my cousin posted. I'm sure it's more opinion than facts but it was still an interesting read.
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