Who are the 47 percent?

By Nancy Cook

September 18, 2012

Mitt Romney’s bashing of the 47 percent of people who pay no federal income taxes may have sounded like a shocking admission to liberals, but it’s a talking point that conservatives--and not just Romney--have grown fond of in the last year as a way to talk about the size of the federal government.

Republican Sen. Orrin Hatch of Utah loves to trot out the statistic. He’s not alone in that on Capitol Hill. During the Republican presidential primary, so did Rep. Michele Bachmann and Herman Cain. Longtime Republican operative Peter Wehner, now a top adviser to the Romney campaign, explained it as “resentment toward the tax system” rather than resentment toward the poor.

“It’s more directed at the tax code than the people receiving the benefits. It’s an inequality, in their minds, a response to Occupy Wall Street,” Wehner told National Journal last winter before joining the Romney team.

But who are the 47 percent? Are they moochers or freeloaders taking advantage of some bloated government?

Well, no, not at all. Most of the people who pay no federal income tax do pay taxes in some form: payroll taxes, as well as Medicare and Social Security taxes.

The people who pay neither make up just 18.1 percent of the taxpaying population, according to a Tax Policy Center analysis from 2011.  And these people are dirt poor.

They are either elderly people or workers who earn less than $20,000 a year. This is not a crowd, in other words, that earns enough cash to make their bank accounts a target for more government revenue. Politically, it also seems unwise to bash them. Who wants to call out a poor, elderly grandma for not paying taxes when she’s living off less than $20,000 a year? Is this Mitt Romney's best answer to President Obama’s class-warfare campaign message?

It’s also ironic, from a policy standpoint, that Republicans like Mitt Romney have adopted the 47 percent as a talking point to appeal to their conservative base. A huge reason that so few people pay no federal income taxes is because Republicans over the years expanded the tax breaks for the working poor and for families with children. These tax breaks, in turn, reduced families’ tax bills, sometimes to the point where they didn’t pay anything to the federal government at all.

The biggest champions of this were Republican Presidents Reagan and George W. Bush. As part of the 2001 and 2003 tax-cut packages, Bush expanded the child tax credit to give bigger breaks to families with children. Similarly, during the 1986 tax-reform campaign, Reagan expanded the tax break known as the Earned Income Income Tax Credit as a way to help out poor people.

At the bill's signing, Reagan hailed it as a victory. “Millions of working poor will be dropped from the tax rolls altogether,” he said in 1986. “And that’s why I’m certain that the bill I’m signing today is not only an historic overhaul of our tax code and a sweeping victory for fairness; it’s also the best antipoverty bill, the best pro-family measure, and the best job-creation program ever to come out of the Congress of the United States.”

Republicans like Mitt Romney still admire and sell Reagan’s legacy of supply-side economics on the campaign trail—the idea that lower tax rates stimulate economic growth so much that the wealth trickles down to all of us.

Yet, this legacy of tax credits for working families (the legacy that really lead to the 47 percent statistic) seems to have been forgotten by the party that first championed it.


By Nancy Cook

September 18, 2012

http://www.govexec.com/oversight/2012/09/who-are-47-percent/58187/