Copious pages of commentary have been poured over the kerfuffle surrounding Romney’s newly-discovered comments regarding the 47% who don’t pay taxes and inexorably vote for Democrats. It's important to note that Mother Jones malevolently edited out two minutes of the video right at the time Romney made the "47 percent" comment. There are a few points that I believe have been overlooked throughout this debate. Here are some things to consider:
- Yes, 47% of the population paid no federal income taxes in 2009. If you’re offended by that fact, go suck it. More importantly, according to the Joint Committee on Taxation, 30% of households actually make money from the tax code, meaning they have a negative tax liability after the refundable tax credits are included.
- Romney’s comments were obviously made off the record and were expressed out of frustration from the fact that there is so much dependency created by Democrats in a way that provides them with a built-in electoral advantage. In doing so, he conflated two different groups; the 47% who don’t pay taxes and the [roughly] 47% who hopelessly vote Democrat. While there’s definitely a lot of overlap between the two groups, they are not synonymous. A number of those who don’t pay any taxes are culturally conservative people who desire upward mobility but are stymied by our centrally-planned economy. There are also a lot of seniors who fit into this category. On the other hand, there are many rich liberals and minorities who comprise the 45-47% of those who incorrigibly vote Democrat yet still pay income taxes. Clearly, the problem is the dependency created by decades of bipartisan redistributive policies, not necessarily all those who are dependent on those programs. Dependency definitely explains, in part, why Democrats have a growing floor of support, but not all 47% of it.
- Some Republicans are uncomfortable with pointing out the number of people who pay no income taxes. They feel that we should never desire to raise taxes on anyone. There are two things to consider about this: First, nobody is saying we should raise their taxes; we are using this argument as a way of combating the lies about who pays taxes put forth by those who seek to raise taxes on the rich. The fact is that we already have the most progressive code, and it has only gotten more progressive since the Reagan and Bush tax cuts and the expansion of refundable tax credits. Second, we might not want to place a tax liability on those who pay no income taxes, but do we need so many people who make money off the tax code? The child tax credit is fine, but should it result in a negative tax liability? These refunds are often steep enough to zero out the payroll tax liability as well. Absent the welfare state, refundable tax credits would be a great alternative, but they should not exist alongside welfare without more limitations.
- People who think that this comment will hurt Romney are forgetting the mentality of most Americans vis-à-vis taxation – a mentality that is engendered by tax withholdings. I like to say that under our current withholdings system, too many people who pay a lot in taxes don’t realize it, while too many people who don’t pay any taxes think they do. A large chunk of the 47%, especially those who don’t receive welfare, will not think of themselves as part of the dependency class because they don’t do the math. They don’t compare their refund check against their annual withholdings.
Like every challenge on the campaign trail, this video can provide Romney with an opportunity to employ some political jujitsu. Romney should remind the media that although almost half the population doesn’t pay income taxes, they pay taxes on Democrat policies.
While Republicans are responsible for the lack of taxation on the poor and some middle class Americans, the Democrat regulatory burden and market distorting-policies represent the biggest and most regressive tax on those people. Whether it’s the devaluing of our dollar, green energy mandates, CAFÉ standards, Obamacare, Dodd-Frank, or EPA regulations, Democrats have increased the cost of food, energy, healthcare, and cars – all vital needs that account for a large portion of the “working class” income. Obama’s debt, along with the monetary policy that has been implemented to service it, is depleting the savings of many seniors who fall into the 47% category.
Those in the 47% would be wise to study which party grew the refundable tax credits and which party imposes policies that raise the cost of living and deplete savings. Unfortunately, they will not learn the facts on their own. Voters never do. Romney will have to make the case to them.