Home > Uncategorized > Taxes and the Circle of Life: We are, have been, or will be the “47%”

Taxes and the Circle of Life: We are, have been, or will be the “47%”

Many have probably heard about the hidden video released yesterday of Romney essentially writing off 47% of Americans as free-loaders and shoe-in voters for Obama. Here’s the transcript:

There are 47 percent of the people who will vote for the president no matter what. All right, there are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it. That that’s an entitlement. And the government should give it to them. And they will vote for this president no matter what…These are people who pay no income tax.

A few thoughts on all of this:

1) Overall, “gaffes” are almost always overhyped because it validates the media’s superficial coverage: rather than doing actual investigation on the candidates or their positions, they serve as “exposers” of quips and ill-spoken quotes and then get to analyze how that will affect the “race.” Candidates have become strait-jacketed because they never know what thing they say will go viral, so political discourse becomes bland and hyperbolic at the same time.

2) Romney was speaking to at a fund-raising event, so it shouldn’t be surprising that he ratcheted up the rhetoric.

3) Plus, the only people who should be surprised by this statement are that tiny minority who has never spoken to a Republican ever. I’ve heard this statistic all the time from Republicans, with the same level of disdain for “those people” over there who take and take but never contribute to society. It’s a Republican founding myth: “In the beginning there were workers and moochers, and behold, the moochers did cry for all our stuff, and the government doth give it to them.”

4) There are few statistics out there that are so ubiquitously used and yet so deeply misunderstood to. Who are those “47%?” Many writers and pundits have already broken down the stats, but here’s the sum up:

 

Source: Tax Policy Center

As this graph suggests, that 47% is no homogenous bunch. We have students (the young) and retirees (the old) with a good helping of working folks who pay payroll taxes but don’t earn enough–or have too many kids–to exceed their deduction/credit limit. A better way to understand this group as those that are on the margins of the life-cycle: when you’re young and old (or starting a family with entry level work) you tend to not pay income taxes. Here’s a better way to visualize it:

 

Source: The Hamilton Project

In short, it’s about the life-cycle, not freeloading. If you don’t pay income taxes, you will, or you did, or thank you for having lots of children so that they can contribute to Social Security.

5) What’s bizarre is that many in this group–working class families but especially the elderly–are probably more solidly in Romney’s pocket than most groups of Obama voters.

6) What’s even more bizarre is that helping people not pay income taxes is a great example of conservative welfare principles. Reihan Salam at the National Review has a great post on this (and may I just say, there are few conservative pundits out there I respect as much as Salam. I wish he had a bigger soap box). In short, conservative welfare principles is about helping people out without undermining incentives to work. A great way to do that is incorporate subsidies into the income tax code: high deduction rates and children tax credits are only available if you work. Rather than dropping money in your lap no questions asked (generally a bad idea), you reward working by indirectly helping you earn more than your actual wages. That is why many conservatives, like Salam, push for wage subsidies too. And why many tax cuts passed by Republicans have helped pushed more people into that 47% (see Ezra Klein on this). So helping people not pay income tax is a great way to provide financial aid to young, poor families without undermining the work ethic. Romney should be championing these things. But he’s not.

7) So the next time somebody goes off about how many Americans are dependent on the government, and that 47% don’t pay taxes, just remember when they say “47%” they really mean “students, the elderly, or poor, large families.” Or, in other words, Satan’s minions.

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Categories: Uncategorized
  1. Will
    September 18, 2012 at 5:54 pm

    I literally snorted when I read that last statement. Nice post.

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