Republican presidential candidate Rick Perry, in an attempt to win the craziness sweepstakes, has been proclaiming hither and yon that half of all Americans pay no income tax. Call me confused, but I thought Republicans wanted to lower income taxes? Maybe it has something to do with who those non-payers are?
Well, who are they? Let’s see:
The number one reason should come as no surprise. It’s because they have low incomes. As my colleague Bob Williams notes:
A couple with two children earning less than $26,400 will pay no federal income tax this year because their $11,600 standard deduction and four exemptions of $3,700 each reduce their taxable income to zero. The basic structure of the income tax simply exempts subsistence levels of income from tax.
Low incomes (or, if you prefer, the standard deduction and personal exemptions) account for fully half of the people who pay no federal income tax.
How foolish. Taxing people existing at “subsistence levels” builds character. Oops! Dropped my monocle! At times of moral crisis like this, I always like to ask myself, “What Would Reagan Do?“:
And who took many of these folks off the tax rolls? Ronald Reagan. He pushed for the historic 1986 tax reform bill, and in a 1987 statement, he took pride in the consequences: “Millions of Americans with low incomes will be dropped from the Federal income tax rolls altogether.”
I guess the new Republican ethos is to (further) punish the poor through taxation. Or something. OK, who else doesn’t pay income taxes? Those damn old people:
The second reason is that for many senior citizens, Social Security benefits are exempt from federal income taxes. That accounts for about 22% of the people who pay no federal income tax.
Those freeloading elderly living high on their maximum of $28,000 per year. Of course, if they’re dependent on Social Security, they probably didn’t pay in the maximum amount and thus aren’t receiving full benefits. Weakling üntermenschen! Speaking of üntermenschen, the third group consists of households that want to provide for their damn kids! I’m sure Rick Perry et alia would argue they should have had abortions and used birth control.
…moving right along, let’s talk about those damn freeloading kids:
The third reason is that America uses the tax code to provide benefits to low-income families, particularly those with children. Taken together, the earned income tax credit, the child credit, and the childcare credit account for about 15% of the people who pay no federal income tax.
Taken together, those three factors — incomes that fall below the standard deduction and personal exemptions; the exemption for most Social Security benefits; and tax benefits aimed at low-income families and children — account for almost 90% of the Americans who pay no federal income tax.
The overwhelming majority of households that pay no income tax earn less than $50,000 per year. Do conservatives who prattle on about this want to raise the bottom half’s taxes? Governor Perry executed an innocent man, so I wouldn’t put anything past him. But someone needs to ask Perry if he wants the poor and the elderly to pay more in taxes (remember that poor workers pay payroll taxes regardless of how poor they are).
Because I don’t think the majority of Americans are that far gone.