Tahlequah Daily Press

September 24, 2012

Much ado over taxes is complex


Staff

TAHLEQUAH — The kerfuffle over a video depicting Republican presidential contender Mitt Romney suggesting the 47 percent of Americans who don’t pay taxes will be voting for President Barack Obama may have abated somewhat, but the wound it opened will fester beyond the Nov. 6 election.

Romney’s figures weren’t quite accurate, and his prediction that people who don’t pay taxes won’t vote for him is off-base as well. Especially in this area, he has a sizable support base among conservative retirees and folks on disability, as well as wealthy Americans who, like Romney himself, make their living primarily from investments rather than payroll checks.

But if there’s an overarching point to be gleaned from all of this, it’s that most Americans – Republican and Democratic – agree that too few of us pay taxes, and that everyone should pay at least something. Yet blaming one party or the other for the proliferation of tax-dodging “deadbeats” is tantamount to rewriting history. A number of programs designed to give the working poor a hand up, and to reward successful Americans for their investment acumen, have enjoyed bipartisan support in years past, when the political climate wasn’t quite as volatile as it is today.

Many people assume the “working poor” pay no taxes, but they do pay federal payroll taxes. On the other hand, a handful of the wealthiest Americans paid no federal income taxes in 2009, due to tax breaks for investment losses. Federal income taxes aren’t leveled on Social Security payments for elderly and disabled Americans, and certain military pay is also exempt.

The Earned Income Credit is a key reason why so many Americans may not pay income taxes. Back when Congress introduced it in 1975, it was extremely popular – so much so that President Ronald Reagan, whom many conservatives hold up as their icon, said this about it: “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 anti-poverty, the best pro-family, the best job creation measure to come out of Congress.”

Reagan believed, like other conservatives of his era, that this little loophole would encourage people to work – and it did. Subsequent presidents in both parties viewed EIC expansion in a positive light. Under Bill Clinton, about a quarter of U.S. households were exempt from income taxes.

That percentage had increased to 36 percent by the time George W. Bush left office, because Bush himself introduced a child tax credit. Under Obama, through a combination of high jobless rates and temporary tax breaks, nearly half of U.S. households haven’t paid  income taxes, though they may pay others – and two-thirds of those who don’t pay incomes taxes do have jobs.

As the economy improves, these temporary tax breaks will expire – as, indeed, they should. And there’s something to be said for the current push to make everyone pay something. Even a minuscule amount suggests not only personal responsibility, but ownership in society.

But in these politically-charged times, Americans need to watch our generalizations and assumptions – not just about who pays taxes and who doesn’t, but about what these folks will do at the polls. It’s a complex topic, and people have complex motives for supporting one candidate over another.