Wednesday, August 31, 2011

GOP needs to stop resentment of low-income people who don't pay income tax

Traditionally, the Republican platform has been lower taxes for everyone, rich, middle-class, and poor alike. Both Reagan's and Bush's tax cuts benefited almost all workers. Recently, however, some Republicans, including several of the leading candidates, have been complaining about the poor not paying enough taxes. Specifically, they say it is a big problem that 47% of Americans do not pay income tax. In some ways, I see their point. If people are receiving social services but not paying for them, there is nothing to stop them from continuing to vote for more and more government services, ad infinitum. However, the working poor already pay quite a bit of tax: payroll taxes, sales taxes, and gas taxes. Saying they need to pay more tax--while also calling for less overall spending on social programs--is an extremely tone-deaf stance that could cost Republicans a lot of working class votes. It smacks of contempt for the poor and class warfare in reverse.

When I worked as an AmeriCorps volunteer three years ago, I made $900 a month before taxes. The $65 or so in payroll taxes that they took out of each month's pay was a huge hit. My AmeriCorps director encouraged me and my fellow volunteers to go on food stamps. I desperately wanted to avoid relying on government assistance, and managed to make it work--but that was possible only because I did not have to pay income taxes. If Republicans did raise taxes on the poor, many of them would probably just use more food stamps and welfare money. The end result would be more taxes and more government spending--which doesn't seem like what the Republicans want.

In fact, here is a Businessweek article by a conservative economist that calls for expanding the earned income tax credit in order to reduce dependence on welfare.

There is still, however, the issue of people receiving social services without paying for them. I can think of two ways to address this issue without raising taxes on the poor. One, limit the child tax credit, WIC, and similar programs so that credits/benefits gradually phase out after two children or so. At some point, parents have to be responsible for supporting their own children, and the government should not subsidize (i.e. encourage) people who have large numbers of children that they cannot support. Secondly, eliminate the payroll tax, replacing the worker's portion with an additional equivalent amount of income tax. I've already discussed the evils of the payroll tax (it's regressive, it often goes unnoticed, it discourages job growth by taxing hiring). Plus, that way, when Congress wants to cut or raise income taxes, every worker will feel the effects to some degree. Hopefully people will start to realize that they have to pay more to get more, and that tax cuts can help people at all income levels not just the rich.


  1. Yes, cut payroll tax AND cut gas tax for the same reason. Then expand income tax to more people and cut the rate for the bottom earners. That way more will have a stake

  2. Actually, I meant to say establish a low rate for the bottom earners, rather than "cut" since they don't pay now. There could still be a portion of the population that does not pay fed. income tax, but certainly almost 50% way too bit a group now.

  3. Completely agree with your second comment--eliminate the payroll tax and establish a low income tax rate for the bottom earners. I don't know about cutting the gas tax, though. On the one hand, it's hard on low-income people. However, it is a consumption tax, which preserves economic efficiency and individual property better than pretty much any other type of tax. It's a tax on using roads and bridges, one of Adam Smith's 3 basic public goods. And cutting the gas tax could lead to more traffic, more pollution and more dependence on Arab oil. I would just make sure (by state law or constitutional amendment) that gas tax revenue can only be used for repair and maintenance of roads and bridges.

  4. A lot of working people make their living using trucks, cars, and gas powered equipment. Taxes in my state (NY) are about 50 cent/gal. I recently read that Exxon makes 2 cents/gal. Why should the government make 25 times more from me than Exxon. I need a full size pickup truck for my work and can't afford or use one of those fancy hybrid mini cars.

  5. Who should pay for road maintenance then? There are two ways to do it. One is the gas tax, which makes people who put more wear on the roads (by driving more or driving larger vehicles) pay more. The other is to take it out of income tax, which means that people who never use the roads pay just as much for maintaining them as people who do. The latter seems unfair to me.

  6. Everyone uses roads since almost every single thing that we buy get to the store by truck or trucks. Also the Feds skim a lot of the money for things other than roads. For example,
    "Out of the $29 billion in fuel-tax revenue collected this year, the CBO estimated $7.6 billion would be diverted into mass-transit. . The Federal Highway Administration’s budget which comes from the general fund also shows core spending priorities in the “highway” account frequently have nothing to do with highways. For example, the agency allocates $6.8 billion to a “livable communities” program designed to promote a leftist anything-but-the-automobile agenda. Another $8.9 billion will be blown on “environmental sustainability” schemes, and $2.5 billion will go to safety - that’s the code word for paying local cops overtime to run speed traps.