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Sunday, October 23, 2016

From the Tea Parties to the corporate boardrooms to the presidential debate platforms, we hear a familiar droning whine about taxes — except the angry message is no longer simply that taxes are too high. Today, conservative politicians and pundits complain instead that some people, namely those too poor to owe federal income taxes, aren’t paying enough. So what if those people can scarcely sustain their families, like the millions of middle-class families doing slightly better but struggling as well?

This is the Democratic “fairness” argument turned upside down, which may prove to have limited appeal. What will appeal to most Americans even less are the proposed Republican solutions, like a national sales tax. And what might surprise them is that the first president to expand tax relief for the working poor was that almighty Republican icon, Ronald Reagan, whose name is constantly invoked by politicians unworthy of his legacy.

However piously they cite the Gipper as their idol, the Republican candidates for president seem united in their desire to repeal the Earned Income Tax Credit, which he justly praised in 1986 as “the best anti-poverty, the best pro-family, the best job creation measure to come out of Congress.” Now Republican politicians increasingly reject the earned income credit as an immoral form of “welfare,” because its provisions have helped to insure that roughly 47 percent of Americans pay no federal income tax, with the poorest receiving a modest rebate instead. That statistic has been distorted all too often into the false assertion, usually uttered on Fox News Channel or right-wing talk radio, that the poorer half of the nation’s population “pays no taxes.”

Of course the working poor pay lots of taxes. In fact they tend to pay more as a share of their income than the very rich, plenty of whom do not work at all. The poor pay state and local income tax as well as sales taxes, gas taxes, and utility taxes, but above all they pay Social Security and Medicare taxes on the very first dollar of income they earn (and on every dollar up to the $106,000 ceiling that shelters the income of higher earners). To suggest that the working poor receive government benefits without paying anything is a brazen lie.

Aside from the earned income credit, there is another very basic reason why the working poor don’t pay income taxes. After decades of falling wages and rising inequality, they literally cannot afford it. As the noted economics reporter David Cay Johnston explained last April 15, the average annual income among the bottom half of American taxpayers was around $15,000. With the first $9350 exempt from federal income tax for single people, a figure that rises to $18,700 for married couples, millions of households don’t earn enough to owe anything to the IRS. At the same time, Johnston pointed out that many of the wealthiest families in the country also pay no taxes thanks to loopholes such as the “carried interest” provision, which Republicans fight ferociously to preserve against “socialist” demands that bankers and investors pay the same rate as their secretaries and janitors.

Although polls show that most Americans — including most Republican voters — strongly favor raising rates on the wealthiest taxpayers, the GOP leadership is sworn to prevent any such reform. Rather than close the grossest loopholes and deductions exploited by billionaires, Republican politicians want to punish all those families living large on $300 a week (and their children) by taxing them more. One way to do that, favored by House Budget Chairman Paul Ryan (R-WI) and presidential candidate Herman Cain, among others, is to impose a national sales tax or value-added tax. The result, as any tax expert could explain, would shift the national tax burden even further from the wealthy to the working poor and middle class. It is their form of class warfare. And unless the rates were much higher than proposed in Cain’s “9-9-9” plan or Ryan’s original budget, a sales tax would increase deficits and debt instead of reducing them.

Why millionaires like Ryan and Cain favor such schemes is obvious enough. What is far less obvious is why they can still pretend that they revere Reagan — or that they want to cut taxes for anybody except themselves.

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Copyright 2011 The National Memo
  • Roscoe K Regornik

    We need politicians who support prudent expenditures for necessary public functions and analysis of future public liabilities, long beyond the election cycles.
    The current public debate needs to focus on taxes (whether as sales/income/property/pump/etc.) which are simple, efficiently administered, fair, and above board with a minimum of subsidies.

  • kurt.lorentzen

    Roscoe K Regornik: Sorry, that makes far too much sense to ever be accepted by the bureaucratic governing body that thinks more rules and regulations are the solution. I work in the fiber optic networking business – a fairly complex infrastructure. The three cardinal axioms in maintaining efficiency and reliability are “simplify, simplify and simplify” (not necessarily in that order :). Experience shows that the tax code is far too complicated. Where “999” is an over-simplification, it’s a great base from which to create a small, concise, understandable tax code that is easily administered and enforced.

  • Roscoe K Regornik

    If we don’t demand change for the better, it will be more Business As Usual while politicians continue pandering to those making campaign contributions and to the mindless Boobgoise.

    We collectively foot the bills for politicians, public servants, and the business community. The politics of confrontation, division, and entitlement takes us further down the socio-economic hole. Investment performance is diminished by the current economic and political climate. The American Dream has been slowly unravelling, beginning with the repetitive oil shocks of the 1970s.

    Business As Usual is not serving us well.

  • Kenneth Kurpeski

    The rich have the voice,they can afford it, T V Radio, it is time ! time we hear from the other side !!! Government needs to formulate a way to hear from the working people, surveys, polls, news programs, Not Government as usual, behind closed doors,with special interest groups, with their foot in the door. Workers that produce a Good or a Service should be better rewarded. Those who use other peoples money to make themselves filthy rich should be made illegal.

  • Zorros Shadow

    As the wealthy commit themselves more and more to the ravishment of the working poor and middle class, they would do well to remember the circumstances of France in history. We will only take this kind of abuse for so long. When the class war begins in earnest, no amount of police force will protect them from the angry and starving…

  • hjasen

    Cain is very wealthy. Paul Ryan is not. You lose credibility when you don’t check your facts. Otherwise, I am very much in agreement with you.