With the passage of the Bush tax cut -- and in particular the revelation that a number of taxpayers won't be benefiting from the child tax credit in the bill -- a strange verbal tic seems to have developed among commentators and politicians on the right: They keep saying that millions of Americans pay no taxes.
This past weekend, for instance, on Meet the Press, Robert Novak said, "I mean, to me, it's obvious that if somebody doesn't pay taxes, they shouldn't get a tax cut."
On Tuesday, Rush Limbaugh said, "Sen [Blanche] Lincoln introduced the idea to give tax cuts to families who don't pay taxes in the first place to the Senate Finance Committee."
Yesterday, the New York Post editorialized, "What the tax cut did was authorize a reduction to Americans who pay taxes. What it did not do (and here's what has so many on the left unhinged) is authorize a tax cut for people who don't pay taxes."
In today's Washington Post, Dana Milbank wrote, "House Majority Whip Roy Blunt (R-Mo.) said Republicans do not fear a backlash, as long as the public understands that it is families who don't pay taxes who are losing out on the credit."
And six months ago -- perhaps setting the tone for the coming conservative strategy in the tax debate -- former Attorney General Edwin Meese said on FOX News' Hannity & Colmes (via Timothy Noah of Slate), "Well, it's very unfortunate that we have the situation in our country now, where as I believe someone pointed out a short time ago on your program, that we now have a constituency that pays no taxes whatsoever."
Do these people pay their own bills? Do they balance their own checkbooks or shop for their own groceries? Looking at my expenses for a month, I seem to do far more than pay federal income taxes in order to contribute my share to the government coffers.
My pay stubs keep listing this thing called "FICA" that pays for Social Security and Medicare. My monthly utility bills, be they gas, electric or phone, have various payments to the federal government included. When I go to fill up my gas tank, I seem to be paying what a sign on the pump refers to as "taxes." If I go out to eat, at the bottom of the check is something marked "taxes." When I buy a new CD, I seem to pay taxes again. A six-pack of beer costs me in both federal and state taxes, and if I ever wanted to start smoking, a carton of cigarettes adds another tax. If I'm paying these taxes, I'll bet the so-called "lucky duckies" -- as The Wall Street Journal last fall labeled poor Americans who pay little or no income taxes -- are paying them as well.
In fact, the lucky duckies are paying a higher percentage of their income in regressive taxes than the members of The Wall Street Journal editorial board are. FICA, of course, is infamously regressive, as the rate drops from 7.65 percent to 1.45 percent on income above $87,000 a year. Sales taxes don't change based on the payer's income, and neither do alcohol taxes, gasoline taxes or most state income taxes. Actually, once all taxes are taken into consideration, those Americans whose incomes are in the bottom 20 percent pay a larger portion of their earnings in taxes than the average American -- and only the top 20 percent pays more.
So is this lie about people who pay no taxes being repeated over and over by every single person on the right? Actually, no: Some of them tell a slightly more honest version of the story. Instead of claiming that the federal income tax is the only tax, they ignore state taxes but say that the federal income tax is the only federal tax. But that still presents two problems: First, there are other federal taxes, and second, state taxes have just as much impact on the average family's spending decisions as federal taxes.
The Wall Street Journal, for example, claimed this week that the tax bill "exempts another three million-plus low-income workers from any federal tax liability whatsoever." Perhaps, but apparently these 3 million people aren't paying FICA. They also don't drive cars, smoke, drink or use the phone. That's not 3 million people. That's Eric Robert Rudolph.
Even sillier is the idea that citizens who pay numerous taxes but don't pay federal income taxes should be grateful to those who do pay income taxes. Ari Fleischer proposed this at a May 29 press briefing, noting, "People who have had their entire income tax burden forgiven -- I think they're very appreciative of the fact that they pay no income taxes in America and still benefit from a national defense, which is paid from income taxes; they still benefit from school programs that are paid at the federal level income taxes."
Some would respond that Social Security taxes aren't supposed to go into the general revenue pool but instead are part of a separate "trust fund." But that doesn't apply to any other federal tax. Those pennies that get added onto our gasoline purchases pay for the same military as the income taxes we pay each April 15. So do alcohol taxes and phone surcharges. If the poor should be grateful that the rich pay income taxes, the rich should be grateful that the poor drink Budweiser.
Even if there were no federal taxes other than the income tax, that wouldn't mean that those who did not pay it would be without tax burden. Many who are fond of moving programs down to the state level seem to forget how those state and local programs are funded: with state and local taxes. And the funny thing is, state taxes seem to be going up around the country -- even in states with Republican governors.
Last year's annual Fiscal Policy Report Card from the anti-tax Cato Institute gave the average Republican governor a C-, not much better than the D+ earned by the average Democrat. Gov. Don Sundquist (R-Tenn.) is seen as the greatest heretic, having actually proposed an income tax in a state that has never had one, but he's not the only Republican being forced to consider tax increases in the wake of financial emergency. For example, Gov. George Ryan (R-Ill.) increased taxes in his state by more than $600 million, and Gov. Bob Taft (R-Ohio) raised them by more than $700 million. And it is a Republican, Utah Gov. Mike Leavitt, who is leading the movement to extend state sales taxes to online shopping.
So as federal taxes go down, state taxes go up -- and the regressive nature of state taxes means that the tax burden is shifted more and more onto those with lower incomes. When average Americans figure their household budgets, therefore, it doesn't change anything if they're sending less tax money to Washington but more to Nashville or Denver. And if the purpose of the child tax credit is to lessen the burden on families raising children, do families that only fund the government through sales taxes and utility taxes need that help any less than families that make enough money to pay federal income taxes?
What's most disheartening is that this lie isn't necessary in order to explain the supposed goals of conservatism. The fact that the average American, rich or poor, pays roughly the same percentage of his or her income in taxes does not contradict the belief that the government spends too much, or that taxes in general are too high. So an obsession with this idea that the poor "don't pay taxes" seems to indicate that for many conservatives, shifting the tax burden to lower-income Americans ranks higher on the list of priorities than, say, reducing the size of government. Guess who's practicing class warfare now?
Aaron Schatz is a writer living in Boston.
