That 47 percent of all tax filers have no income-tax liability is now one of the most widely known statistics on the right. (Actually, according to the Tax Policy Center, the figure was 47 percent in 2009 and will be 46 percent for this tax year, but 47 is the number that has lingered in the public debate.)
…The argument these conservatives are making has two components. First, it is wrong as a matter of civic morality for some people — let alone large numbers of people — to contribute nothing to the support of the federal government. Second, this situation is politically dangerous because it means that, for a large number of voters, big government is, or appears to be, free. These voters will therefore support the expansion and oppose the retrenchment of government, voting themselves goodies at other people’s expense.
I cannot emphasize enough how often I see this argument from friends, colleagues, strangers, etc. Apart from how powerfully disconnected from reality such a conventional narrative is, I am routinely amazed how this freeloader sentiment resonates even with those I wouldn’t characterize as “conservative” anything. As to why this concept is reality-challenged, this (my emphasis in bold):
The good news is that these fears are overblown. The 47 percent figure does not mean we are near a tipping point. Most of the people included in that figure do make financial contributions to the federal government, and there is no reason to think that nonpayment of income taxes is turning millions of Americans liberal. The bad news is that worrying too much about this number will lead conservatives down an intellectual and political dead end.According to the Tax Policy Center, provisions of the tax code that exempt subsistence levels of income from income taxes — the standard deduction, personal exemption, and dependent exemption — are the reason for about half of the tax filers who owe no income tax. Another large group of filers pays no income tax because its members are elderly and benefit from such features of the code as the non-taxation of some Social Security benefits. The tax credit for children and the earned-income tax credit, an effort to boost the pay of low-income workers, wipe out income-tax liability for other taxpayers. Those credits are “refundable,” meaning that beneficiaries can get money on top of paying no income tax. Other provisions of the code account for the rest of the 47 percent: education credits, the non-taxation of welfare payments, itemized deductions, and so on.
Ponnuru continues by listing more standard ‘liberal’ retorts of the “47% still pay payroll taxes and federal excise taxes” nature. I put ‘liberal’ in quotes because, as he exhibits by writing this article, I believe it to be a contextual counter that anyone without an agenda or predilection to talking points should be saying. What Ponnuru brings up that is new to the conversation is a compelling proposition for why we should consider payroll taxes as contributions to general federal spending:
How to count payroll taxes is a disputed subject. Many conservatives argue that since payroll taxes are dedicated to Medicare and Social Security, people who pay only payroll taxes are contributing to their retirements but not to the general operations of the government. The irony here is that FDR deliberately and explicitly introduced the payroll tax to accompany Social Security because it would encourage people to draw this false connection. In reality, the relationship between payroll taxes sent to Washington and Social Security benefits sent back is loose: Today’s beneficiaries get much more than they sent, and tomorrow’s will get less. (In the case of Medicare, there is no relationship.)The point of the payroll tax, for FDR, was to ensure that “no damn politician” could ever take away the benefits because (to paraphrase conservative author William Voegeli) all the damn voters would think they had earned those benefits through their payroll taxes. All federal taxes go to the federal government, and all federal spending comes from it: The rest is accounting, and accounting tricks. People who pay payroll taxes are funding the federal government, and conservatives who deny it are falling for a trap FDR set for them.
I’ve been confounded these past few years by all the varying theories that come from the political right concerning beneficiaries of federal government benefits. Rep. Paul Ryan’s budgetary framework that imagines future Medicare enrollees will completely forget the fact that if they were 10 years older they’d have much more affordable healthcare, while he’s careful to tip-toe around the perceived eagle-eye perception of current Medicare recipients. Or this insistence that current low-income beneficiaries are maniacally foresighted voters, blindly voting for Democrats to keep their government assistance ‘fix’, while simultaneously voting for Republicans in eight of the 10 states with the highest rate of non-payers:
The Tax Foundation has calculated the percentage of filers in each state who pay income tax. The ten states with the highest number of non-payers are a strongly Republican bunch: Eight of them went for John McCain in 2008, and nine of them have Republican governors. Keith Hennessey, an economic adviser in George W. Bush’s administration, notes that the historical data suggest that the child credit was the main reason for the increase in the number of non-payers between 1995 and 2007. If the conservative story about falling income-tax rolls is true, then, we should expect to see middle-income parents moving left, compared with the general electorate, during that period. There is no evidence that anything of the sort has happened.
I do encourage you to read the rest of Ponnuru’s piece. He makes several acute observations that are very informative for those living outside the Tax Matrix.