A
recurring proposal by conservative candidates in the last several
election cycles has been to expand the tax base; i. e., we need for
those people who don't make enough income to pay income taxes to do
so. Why should they pay? Because this relief is seen as unfair.
They should pay like the rest of us. Never mind that they pay other
taxes such as payroll taxes – FICA and medicare taxes – and sales
taxes. Of course this is a question of equality – a central
federalist value.
Here
is how NBC News describes this tax “break”:
The
Tax Policy Center researchers found that about half of the group [of
non income tax payers] is basically exempt from federal income taxes
because they are low income and also may have a large family. In a
blog released not long after its report, the TPC explained that “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
other half are zeroing out their federal income tax bill with other
provisions, such as itemized deductions or the child tax credit.
Some are seniors who are living off Social Security. …
Not
everyone who pays no federal income tax is in the lower income
brackets. A separate report released last spring by the Internal
Revenue Service found more than 35,000 people who made more than
$200,000 in 2009 also managed to zero out their tax bills. That
report noted that it generally takes a number of different credits
and deductions for wealthy people to not pay any federal income
taxes.1
This
lack of payment, as it refers to the lower end income earners, became
a concern when presidential candidate, Mitt Romney, brought up this
half of the population in his infamous 47% remark. Actually, the
non-payers of income tax amount to about 46% of the population
according to the account cited above. But okay; how would these
people's lives be affected if they were charged with paying some
minimal income tax? Of course, each case is different, but
economist, Joseph E. Stiglitz, gives us an idea.
Stiglitz
sets up a “typical” situation by looking at a household with one
adult earner and two children – as in many single-parent family
households. He has the earner working forty hours a week. The
person earns just above minimum wage, $8.50 an hour or $16,640 a
year. He or she pays $200 per month of his/her $750 per month health
insurance bill (the employer picks up the rest). With this
deduction, his/her take home pay for the year is $14,240 a year.
Stiglitz has the family living in a two bedroom apartment for $700 a
month which leaves the family with $5,840 a year to meet all other
expenses. Car expenses – owning one is most likely a necessity in
most localities in the US – uses up about $3,000 a year for the
car, maintenance, fuel, insurance, and the like.2
After this expense, the family is left with $2,840 or $3 a day. Now
let me go beyond the Stiglitz situation; let's say one of the kids
needs a bike to get to school and one day someone steals it or some
such event takes place. Stuff happens. AND now let's have them pay
some “minimal” income tax.
But
didn't the cited article above note that the tax relief is in effect
for earners who make roughly $10,000 more a year, remembering that
that figure was for a family of four? Yes; that's about another $28
a day for a total of $31. Note that Stiglitz didn't include payroll
taxes, clothing expenses, food, educational expenses, some
entertainment, medical expenses not covered by insurance (like
co-payments), and I suppose there are other things I can't think of
right now. If you are in agreement with Mr. Romney, why not, for a
few days, run the experiment and see if three members of your family
can live on $31 a day. Millions of our fellow Americans have to do
so on this or lower amounts. Here is a good time to remember that
rates of long term unemployment – being out of work for more than
six months – are at historic highs. I know; they wouldn't pay
income tax because they have no income.
Let's
add another element to this narrative. The comedian, Chris Rock,
has, as part of one of his stand-up routines, the differences he sees
between having a job and having a career. He begins by making the
observation that in a job, one has too much time and in a career, one
has too little time. Jobs are usually menial and time drags as one
does specific activities such as – and this is his example –
scrub those pans. But in a career, one is engaged in engaging work.
One gets lost in it and often seems not to have enough time to do all
one wants to accomplish. Lower income people have jobs, if they are
lucky. But heck; they don't have to pay income tax.
1Linn,
A. (2013). The 47 percent: Here's who pays no federal income tax.
NBC.com. Retrieved from the Internet, see
http://www.nbcnews.com/business/economywatch/47-percent-heres-who-pays-no-federal-income-tax-1B5956488
.
2Stiglitz,
J. E. (2012). The price of inequality: How today's divided
society endangers our future.
New York, NY: W. W. Norton and Company.