On The 47%, And Short Memories

September 21, 2012

It appears that Mitt Romney’s bit about the 47% of Americans who pay no federal taxes is exploding. Much to Romney’s chagrine, a critical mass of people appear to have realized that there are multiple ways in which a person can end up with no federal tax liability despite, e.g., working full time, or in the case of 35,000 American households, even making upwards of $200,000/year.

What is ironic about this state of affairs is the fact that many of the tax incentives in the federal tax code are things that we theoretically want to reward people for doing. So the fact that 47% of Americans have no federal tax liability is also theoretically something we should be celebrating.*

But what should shock people about this particular “attack” is not the fact that it overreaches and encompasses folks who are clearly not lazy, unemployed individuals that are content to suckle at the government teat. What is more shocking is the short memory of Republicans who have used this line of attack before. As I wrote back in June, the patron saint of the Republican party, Ronald Reagan, was actually trying to get as many people off the tax rolls as possible when he signed the Tax Reform Act of 1986, because he believed that taxing poor people was a central factor in increasing the gravity of their poverty. Here are the words of the Legislative Committee that recommended the bill to Congress:

An overriding goal of the Committee is to relieve families with the lowest incomes from Federal income tax liability. Consequently, the Bill increases the amounts of both the personal exemption and the standard deduction…so that the income level at which individuals begin to have tax liability will be raised sufficiently to free millions of poverty-level individual from Federal income tax liability.

The entire point of Reagan-era tax reforms was to make it precisely so millions of Americans would be taken off the tax rolls completely. It takes an extraordinary act of cognitive dissonance to praise Reagan dogmatically out of one side of your mouth—as Romney has (though he rejected Reagan’s policies in his former life)—and then proceed to complain about the inevitable and intentional result of Reagan’s signature policy reforms.

To be fair, one could reasonably object by pointing out that Reagan’s reforms also eliminated tax loopholes, which now exist in spades. But Romney’s attack was not directed at middle class and wealthy people who utilize tax loopholes to eliminate their federal tax liability. He was attacking an archetype of the American poor; the same individuals who Reagan believed would be helped by eliminating their federal tax liability. Notably, Reagan also believed eliminating federal tax liability for low-income Americans would help incentivize people on public assistance to re-enter the workforce, by allowing poor Americans to keep more of their already modest paycheck. Here again, Romney misses the mark by failing to understand Reagan’s intent and methodology, all the while counter-intuitively praising his example whenever the opportunity presents itself.

*theoretically, of course.

10:04pm | URL: http://tmblr.co/ZMMjnxTqf1DH

(Notes: 53)