US Elections

Surrendering the tax advantage

By Jonathan Bradley in Sydney, Australia

25 November 2011

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Ramesh Ponnuru is alarmed by the number of Republicans calling on the government to require more Americans to pay income taxes:

It began as a retort and became a fear. For years, when liberals would accuse conservatives of cutting taxes for the rich, our main argument was that low marginal tax rates on high earners were good for the economy. But we would also respond that rich people actually pay a large share of all income taxes. Over time, many conservatives grew convinced that the true fairness issue raised by the tax code is that this share is too large — and, even more, grew alarmed by how many people were not paying income taxes.

Among conservatives, this proportion is famously known to amount to 47 per cent of the population, though, as Ponnuru points out, this is the 2009 figure, and it has been unnaturally inflated due to the recent recession. These non tax payers are off the hook either because they receive untaxed income from Social Security or because they simply don't earn enough to pay income taxes. Most of them do, however, pay other forms of taxes, such as payroll taxes, or state and local sales taxes. 

Ponnuru explains his fellow conservatives' concerns, and dismisses them:

The argument these conservatives are making has two components. First, it is wrong as a matter of civic morality for some people — let alone large numbers of people — to contribute nothing to the support of the federal government. Second, this situation is politically dangerous because it means that, for a large number of voters, big government is, or appears to be, free. These voters will therefore support the expansion and oppose the retrenchment of government, voting themselves goodies at other people’s expense.

The good news is that these fears are overblown. The 47 percent figure does not mean we are near a tipping point. Most of the people included in that figure do make financial contributions to the federal government, and there is no reason to think that nonpayment of income taxes is turning millions of Americans liberal. The bad news is that worrying too much about this number will lead conservatives down an intellectual and political dead end.

If nothing else, I'm surprised more conservatives are not concerned about the political ramifications of this position on taxation. It's not just that voters, particularly the poor or elderly who currently avoid paying federal income taxes, might look askance at a politician who asks them to pay more. Many Americans likely do not realise they don't pay income taxes. It's that the Republican Party, if it pushes this line too hard, risks losing a big advantage it has built up over time.

I discussed this advantage recently in American Review:

But Republicans tell voters that Democrats want to raise taxes. An informed voter will know the Dems only want to put up the taxes of those making more than $250k. But most voters are uninformed, particularly the coveted genuine independents who are so influential at election time. And for voters who really don't want their own taxes to go up, it's safer to stick with the guys who don't want any taxes to go up, instead of trusting that the Democrats will only tax the wealthiest ... Republican tax policy over recent years is very easy to explain: They don't like taxes. Ever.

Democrats have the difficult task of telling voters that they only want to raise taxes on some people who can already afford it. Republicans, however, have been so opposed to any tax increase of any kind that they've been able to convince voters that voting for a Republican is the best way to ensure your taxes never go up, no matter who you are. It doesn't make a whole lot of sense to ask voters to work out whether they're in the 53 per cent or the 47 per cent when the GOP has previously found such advantage in treating voters as the 100 per cent.

That is, the 100 per cent who Republicans think should not have to pay more taxes.  

Tags: 47 Per Cent, 53 Per Cent, Conservatism, Conservatives, Federal Income Tax, Ramesh Ponnuru, Republican Party, Taxes

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