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The Rich, the Poor, and Changes Over Time: How Mitt Romney’s Condemnation of People Who Pay No Federal Income Taxes Conflicts With a Republican Talking Point About Income Mobility

Republican Presidential nominee Mitt Romney’s campaign is in trouble.  The campaign started with a major disadvantage: a candidate who is notably lacking in both policy specifics and personal charisma.  Then, making matters worse, Romney’s willingness to pander to the furthest right fringes of his party during the primaries removed any remaining suspicion that he had even a shred of integrity.  Perhaps worst of all for the Romney campaign, however, has been the spate of recent errors that threaten to end the viability of his candidacy.

One of the most damaging of those errors can be found in Mr. Romney’s derogatory statements about those who are now ironically referred to as “the 47 percent,” the people who—according to Republican dogma—do not pay taxes and thus are not contributing to society.  Not only are Romney’s comments on this topic factually absurd, as I will discuss below, but with them, he also managed to convey a degree of disdain for ordinary Americans that shocked even cynical political observers.

Romney stated that this group of people—the 47 percent—“believe that they are victims,” that they have an undeserved belief “that they are entitled to health care, to food, to housing, to you name it,” and that he could never convince them to take “personal responsibility and care for their lives.”  The problem is not that some people find themselves too poor to pay taxes, according to Romney; it is that they are morally defective.

This is rhetoric that, only a few years ago, would not have found a place in the speech of any major-party candidate for any national office.  Yet the Romney campaign has refused to back away from these words.  Although the campaign has tried to spin Romney’s comments as hortatory (that is, to pretend that Romney was trying to say that it would be just great if poor people would succeed enough to pay taxes) , Romney’s actual words indicate that he has given up on anyone’s seeing the light.  And now, the Romney/Ryan ticket’s new tack is to claim that this is the debate that we should have been having all along.  So far, the campaign’s attempts at damage control are not working.

Such high-profile, damaging comments, spoken in the midst of a Presidential campaign—one in which victory is, almost unbelievably, still not out of reach for Romney—have naturally been discussed at great length in the national press.  Nearly every aspect of what Romney said is either demonstrably false, or grotesquely misleading.  His attempt to paint nearly half the country as irretrievable sponges, taking from productive people while doing nothing to help themselves, simply does not hold up, when compared to the actual facts.

In this column, I will briefly summarize a few of the more glaring ways in which Romney’s comments misstate reality.  Beyond those now-widely-discussed errors, however, his comments also bear scrutiny for the way in which they contradict another central pillar of Republican orthodoxy: the tenet that, at any given moment in time, inequality is not a matter for concern, because the great American equality machine allows hardworking people to move into higher income brackets over time.

Romney and his fellow Republicans are wrong in two ways.   They are wrong when they look at who pays taxes only in a single year, and they are also wrong when they look at who becomes rich over the course of many years.  Either way, their preferred policies are based on a fundamental misrepresentation of the reality of Americans’ lives.

The Tired Debate Over Who Pays Federal Income Taxes: Romney Repeats a Completely Discredited Talking Point

The central factoid that motivated Governor Romney’s tirade about the “47 percent” is that, in recent years (years in which the continuing weakness in the economy has resulted in fewer people paying taxes), some fraction approaching half of the U.S. population has had no net federal-income-tax liability each year.  That number has hovered in the mid-forty percent range since the beginning of the Great Recession.

Romney is hardly the first Republican to try to make a political point out of this odd idea that paying federal income taxes is a necessary condition for being a contributing member of society.  A year ago, during the lead-up to the Republican primaries, I wrote a column here on Justia’s Verdict debunking this idea, which was then being pushed by doomed Presidential candidate Michelle Bachmann.  Bachmann, without any analysis or explanation, simply asserted that everyone should pay at least one dollar of taxes, apparently to make sure that everyone was sufficiently motivated to participate in American society.

Even in 2011, however, this spurious claim was already old hat.  In early 2007, I wrote a column critiquing the same claim, which was then being pushed by some former advisors to George W. Bush.  The claim was wrong on many levels, as was laid out in detail in my column, as well as by other economists and tax analysts.

It is hardly news, however, that Mr. Romney is willing to repeat discredited nonsense.  The only surprise, with respect to the “47 percent” remark, was that he repeated this particular bit of discredited nonsense with such an air of superiority, telling a group of the richest people in the country that the point of the election was to find a way finally to put an end to the dependency of those undeserving masses who do not even earn enough money to pay taxes.

Looking at Who Pays Taxes: In Fact, Nearly Everyone Pays Taxes Every Year

Even though these arguments have now been discussed at length in many venues, it is worth running briefly through the reasons that Romney’s comments are so completely wrong.  The nonpartisan Tax Policy Center (TPC) recently summarized the various falsehoods and distortions that are inherent in Romney’s remarks, and I will comment on some of these as well.

The most obvious point, TPC noted, is simply that “[t]he vast majority of people who pay no federal income tax have low earnings, are elderly or have children at home.”  In other words, we exempt certain people from paying federal income taxes because they have the least ability to pay.  That is not a defect of the system.  It is a moral requirement.

Moreover, the federal income tax is not the only tax that people pay.  TPC’s analysis shows that if we simply take into account the payroll taxes that fund Social Security and Medicare, the percentage of people who are not paying taxes in a given year falls from 47% to 28%.

Notably, another Republican talking point is that payroll taxes are not really taxes at all, because those taxes finance benefits that the government will later bestow on its citizens.  As I argued in the Verdict column from last Fall that I noted above, however, following that argument to its logical conclusion reveals that the wealthiest Americans are the biggest moochers of all.  They are the ones who rely upon the government to provide the legal and economic building blocks upon which their fortunes are built (and that protect those fortunes, once they have been amassed).

It is also now well-understood that there are other federal taxes that nearly everyone pays (such as excise taxes), as well as taxes that people pay indirectly (including some taxes that appear to be paid by corporations, but that are passed on in part to workers in the form of lower wages).  Most importantly, state and local taxes are quite regressive.  State income taxes tend, for example, to have much smaller exemptions, while sales taxes are paid by everyone who purchases goods at a store, and such taxes represent a much larger fraction of the incomes of the poor than they do of the middle class or the rich.

The idea that, at a given moment in time, only half of the country is paying taxes is, therefore, so wrong as to be laughable.  That it has become the key talking point for Republicans for almost six years now would be amazing, if it were not for that party’s track record when it comes to denying the realities of global warming, evolution, and any other inconvenient aspect of taking the actual economic or scientific evidence seriously.

The Snapshot and the Moving Picture: Romney’s Story About the 47 Percent Becomes Even More Absurd When We Look at the Passage of Time

The New York Times recently printed a guest column entitled, “I Was a Welfare Mother,” in which the author recounted a time, early in her life, when she received benefits from the government to help feed her family.  She emerged from that time to become a productive (and tax-paying) member of society. Her column thus laid bare the assumption embedded in Romney’s comments: that the same people are not paying taxes (and are receiving government benefits) every year.

Even those of us who have never reached the point of receiving benefits that are labeled “welfare,” however, certainly know that a snapshot of one’s life fails to capture the reality of how one’s economic situation changes over the decades.  I paid for my college tuition largely out of Social Security survivor’s benefits, which I received because my father had died when I was a teenager.  My graduate school tuition was paid by a National Science Foundation grant, which is part of a federal government program.

During those years, I always paid some taxes, but almost never did I pay federal income taxes.  Now, however, I have earned enough income to face a positive federal income tax liability for many years, and I am fortunate enough that my education has guaranteed that this will continue for many years to come.  I will retire having paid roughly 25% of my lifetime income in taxes, even though I will have paid no federal income taxes in some earlier years.

And my situation is hardly an isolated anecdote.  As the TPC study noted above points out, nearly everyone pays federal income taxes during their lives.  The idea that almost half of Americans do not pay taxes ever, and that they are stubbornly refusing to wean themselves from the government’s largesse, is simply wrong.

The Contradiction: Republicans Insist on Looking at Income Mobility Over Time, Because They Think That Doing So Supports Their Anti-Redistributive Biases

Mr. Romney and his ideological supporters gleefully grab onto an annual snapshot of paying federal income taxes, as if it is a meaningful description of the moving picture of real life. However, they simultaneously insist on taking the opposite approach in a related context:  A favorite Republican response to the arguments about the large and growing degree of income inequality in this country is that inequality at any given moment does not matter, because over time people move into and out of various income brackets.

The idea behind this argument is a simple one, but the argument itself has been debunked repeatedly, going back at least to the mid-1990s.  If it were true that hard work could move a person from, say, the lower-middle-class to the upper class, and that being lazy and ignorant could move a trust fund baby from the penthouse to the basement, then income inequality might be less morally troubling.  This is the “blender” theory of American inequality:  It holds that, as a kitchen blender moves its contents up and down, a dynamic economy also moves people up and down over time.

The evidence, however, tells us otherwise.  One of the more embarrassing early attempts to justify the blender theory (which was, unsurprisingly, authored by an economist who now is an advisor to the Romney campaign) looked at people’s incomes over time and found that people who were in the bottom quintile had a very good chance of moving into the middle and even upper quintiles after a few decades.  Incredibly, however, the subjects of that study included a large group of college students—people who would, in other words, temporarily reside in the lowest income bracket, even if they were from the wealthiest families, and who would surely move into higher income ranges during their adulthoods.

Although that particular study was especially dishonest, even the less ridiculous attempts to justify the blender theory have failed to show that there is more than a modicum of rise-by-one’s-own-hard-work income mobility in the U.S.  Indeed, it turns out that the United States has less income mobility than even “Old Europe,” the countries with the stronger safety nets that are supposed to mean the death of capitalistic striving.

In the broadest context, therefore, Mitt Romney’s comments about “the 47%” are dishonest on three separate levels.  The first, and most familiar, level is simply that he is focusing only on the payment of one kind of tax (during a time when very few people would be expected to pay that tax), and ignoring all of the other taxes that people do pay.

Romney’s second level of dishonesty, which has become more familiar over the last few weeks, is that he is condemning people for creating a “culture of victimhood,” based on the false belief that a person who pays no federal income tax in a single year will never pay any federal income tax.

Finally, Romney’s third level of dishonesty is in attacking President Obama and many Democrats for believing in the virtues of income and wealth redistribution, based on the idea that the American economy will naturally allow hard workers and strivers to rise to the top.  That is a nice fairy tale, but it is not how the real world works.  And pretending otherwise needlessly and cruelly condemns people to continued suffering.

Neil H. BuchananNeil H. Buchanan, a Justia columnist, is an economist and legal scholar, a Professor of Law at The George Washington University, and a Senior Fellow at the Taxation Law and Policy Research Institute, Monash University (Melbourne, Australia). He blogs at DorfonLaw.org, and he is the author of The Debt Ceiling Disasters: How the Republicans Created an Unnecessary Constitutional Crisis and How the Democrats Can Fight Back.
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7 Responses to The Rich, the Poor, and Changes Over Time: How Mitt Romney’s Condemnation of People Who Pay No Federal Income Taxes Conflicts With a Republican Talking Point About Income Mobility

  1. Katherine Edman says:

    Thank you for this analysis. This provides a much-needed factual context behind Mr. Romney’s absurd and insulting comments. To me, the shocking thing is not that a large percentage of Americans pay no income tax (although they clearly pay many other taxes, as you point out) – the shocking thing is that so many Americans, in this allegedly ‘richest country on earth,’ earn so little that they pay no income tax. Considering that wages have stagnated while both productivity and corporate earnings have dramatically increased – and that so many people lost their jobs over the past 5 years – it is hard to blame low earnings on the workers. But the deeper insult, as you point out, is the presumption that low earnings equal inherent character flaws. Who pocketed all that extra wealth generated by the higher productivity of the workers? Isn’t greed a character flaw?

  2. Leo says:

    My hat off to you professor, you have clearly pointed out the truth.

  3. Romney should have never made those remarks although he has
    claimed that labeling was not the intent and that he was only explaining the demographics
    of a group of people he thought would never vote for him. This being said you
    have to ask yourself is it really true? There is probably a little truth in
    what he believes to both sides of his statements. Each of us needs to ask
    ourselves how he will run the state of affairs out of Washington if elected.
    That being said we all have seen how presidents will make things look once in
    office. This is especially true when the person in the White House is Democrat.
    This does not infer that all Democrats nor does it infer that no Republican
    Presidents have done this. This is to hide, cover-up or ignore the truth of
    what they have done or believe in doing with the help of big media. This
    includes who they support. Down through the years the Democrats have enjoyed a
    renowned tolerance from the media. One example is the recent rate hike in the
    BLM rental fees on mining claims. Bear with me so I can explain the circumstances.
    The main news ignores this as with many other events which takes advantage of
    the poorer over the large corporations.

    Fees were changed in the mining law to raise fees in a very
    specific area of mining which affects only individual citizens in whom 90% are
    in the lower middle class earners or retired trying to supplement their income and
    stay healthy by exercise. Some are younger
    and use these claims to supplement their income or in some cases the income
    they no longer have. This raise in fees was in the omnibus in the many pages
    and pages and you could say maybe the President did not realize that his people
    had put that item in there but he backed it up with an Executive order. You may
    think that this was only a 10 or 15% raise well if you have as many a 160 acre
    claim the raise is 800%. Yes 800% and without a public hearing or any comment
    period. This huge raise was not put into effect until a month before it was
    due. If you are late on payment of your holding you automatically loose it, no
    grace period ever. This took a 160 acre claim from $140.00 dollars per year to
    $1120.00 dollars per year. The claim owner cannot live on it, and the claim
    also remains open for all recreation including camping for 14 days at a time
    for anyone. The claim owner is held responsible for any damage anyone does on
    his or her claim. The only special rights the claim owner has is exclusive
    rights to the taking of minerals that has been removed, usually by erosion,
    from its original position in the bedrock and is in an unconsolidated state. They
    use picks and shovels because no earth moving equipment allowed, without
    another group of costs, reports and permits that has to be approved through all
    agencies with interest in the area. It could be said that the large mining
    corporations may have been the target. The president excluded in the raise all
    hard rock (LODE) claims, the raise only pertained to the Placer Claims. Virtually
    all large mining acquisitions are hard rock only, this is where large pits are
    make in the ground, or tunneling underground both with large mill sites and
    usually a caustic leaching process to acquire the gold from the gold laden ore.
    Placer claims are claims that the owners can only work the loose soil that has eroded
    in stream beds and such. Most of the hard rock companies are from Canada and
    normally pay NO taxes on the gold, claim they don’t make any money at least not
    till they get to Canada. I guess they don’t think the Colonies should be paid
    for what the English empire takes.

    If you think that one party is for corporation and the other
    party is not. DO NOT KID YOURSELF. Just look, has the loop holes been removed
    from the income tax regulations that allows corporations to get away not paying
    their fair share. This could have been done with an executive order. Executive
    orders are not or should not be reserved for only the middle and lower class
    wage earners. No large news agencies or will cover this story, it is not in the
    interest of the party that is running an incumbent in the executive office.

  4. Charles says:

    Even though I am now disabled for life, I worked 25 years and did pay all State and Federal Taxes and yet even now, I still pay all due Taxes to the State and Federal Government every time I make purchases on any Taxable items at any store, online Internet or at Taco Bell for that matter so, I think Romney has it wrong and he is leaving out these points I am making.

  5. Ronad J. Ellett says:

    Neil:
    The points you make are valid but there is a fourth level of falsehood that you have neglected. M.Romney asserts that these “47%” all support President Obama. (The implication being of course that Obama has almost no support among those pay federal income tax.) M. Romeny is just misrepresenting the facts on this point as well.

  6. Bridgette Neal says:

    Well, well…who can the people turn to now, God? I do believe that was the plan all the time. Sometimes you have to be hit with a dose of reality to realize that you have been left with no other way out, except the way …you should have found in the beginning on your own…I am glad, I found my way. I will say this, I pray that all Americans do not settle and don’t compromise with morals, you don’t believe in…that is the way to find your/our way.//Better late than never.

  7. Pingback: Governance by a Party With a Leadership That Has Been Taken Over by Sociopaths:The Fourth and Final Column Analyzing What Mitt Romney Would Do As President | ~ New England Women for Change ~ Women for Obama ~

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