An Auspiciously Timed Republican Meltdown
The Republican party is in a bit of a meltdown in response to the leak of Mitt’s comments about the 47% of the country he disdains. Some–mostly the pundits not facing voters in November–are embracing his claim that Democrats are moochers (ignoring that a lot of the seniors, poorer service members, and Red State working poor are actually Republican voters). Others–especially those on the ballot in November–are attacking Mitt for being such a cad.
I’m most fascinated by the Weekly Standard’s John McCormack’s attack on Mitt’s purported misunderstanding of conservatism.
The same kind of person who says, “Forty-seven percent of Americans pay no income tax. So our message of low taxes doesn’t connect…. So my job is not to worry about those people. I’ll never convince them that they should take personal responsibility and care for their lives.”
These appear to be the words of somebody who doesn’t understand American conservatism and its relationship to the American idea. Conservatives don’t believe in economic determinism. Conservatives know–and explain why–their economic policies will help the poor, as well as senior citizens, working families, and our troops who pay no income taxes. Conservatives realize that the Republican party is not the party of people who want to be rich, it’s the party of people who want to be free.
But in an interview this afternoon, he conceded yet again that his tax policies won’t appeal to half the country. “I’m talking about a perspective of individuals who I’m not likely to get to support me,” Romney told Neil Cavuto on Fox News. “I recognize that those people who are not paying income tax are going to say, gosh, this provision that Mitt keeps talking about, lowering income taxes, that’s not going to be real attractive to them.”
The strange thing is that Romney’s tax plan isn’t actually aimed at lowering taxes. It’s a revenue neutral plan that is designed to spur growth–and create jobs–by lowering rates and reducing or eliminating tax loopholes. Maybe it’s a hard plan to sell, but I’ve watched Paul Ryan persuasively makethe case to skeptical constituents that taxreform would grow the economy and create a fairer tax code.
McCormack takes Romney to task for saying out loud the poor won’t benefit from “tax reform” and blathers about how “freedom” will “spur growth.” He takes Mitt to task because he’s not as convincing as Ryan when he claims cutting taxes further will benefit everyone.
The meltdown is so delicious because Republicans don’t seem to know whether to abandon the myth that has driven the Republican Party for the last 50 years or not.
And because the Congressional Research Service just came out with analysis that it is, in fact, a myth.
Income tax rates have been at the center of recent policy debates over taxes. Some policymakers have argued that raising tax rates, especially on higher income taxpayers, to increase tax revenues is part of the solution for long-term debt reduction.
Other recent budget and deficit reduction proposals would reduce tax rates.
Advocates of lower tax rates argue that reduced rates would increase economic growth, increase saving and investment, and boost productivity (increase the economic pie). Proponents of higher tax rates argue that higher tax revenues are necessary for debt reduction, that tax rates on the rich are too low (i.e., they violate the Buffett rule), and that higher tax rates on the rich would moderate increasing income inequality (change how the economic pie is distributed). This report attempts to clarify whether or not there is an association between the tax rates of the highest income taxpayers and economic growth.
Throughout the late-1940s and 1950s, the top marginal tax rate was typically above 90%; today it is 35%. Additionally, the top capital gains tax rate was 25% in the 1950s and 1960s, 35% in the 1970s; today it is 15%. The real GDP growth rate averaged 4.2% and real per capita GDP increased annually by 2.4% in the 1950s. In the 2000s, the average real GDP growth rate was 1.7% and real per capita GDP increased annually by less than 1%. There is not conclusive evidence, however, to substantiate a clear relationship between the 65-year steady reduction in the top tax rates and economic growth. Analysis of such data suggests the reduction in the top tax rates have had little association with saving, investment, or productivity growth. However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top of the income distribution. [my emphasis]
Thus, at precisely the moment when Republicans are beating up on Mitt for suggesting–even if inadvertently–that the poor have no self-interest in his tax cuts for the rich, the non-partisan CRS comes out and shows that, in fact, they do not (and have not, for two generations).
It remains to be seen whether any political entity will push this point home (indeed, one of the tax cut plans that CRS says would lead to more inequality is the President’s own Catfood Commission plan).
But Republicans don’t appear to know how to respond to Mitt speaking the truth, admitting that the poor have no interest in seeing rich people like him get further tax cuts, and speaking the truth in such a snotty disdain.
I think you are the first person to point out that what Romney said was actually true — this 47% of voters will have no interest in his tax cut plan. Yeah, it was pretty disastrous the way he said it and the way he wrapped it in other pretty awful things, but what he actually said was pretty obvious.
Worse, I am pretty sure that there will be a lot of people out there who are surprised by that number and who will take away an entirely different message from all of this, as in, will be talking about how even the working poor should pay some token amount of income taxes even if it is $10/year. In fact, I already see that conversation happening in social media. So is all of this going to accomplish what was expected by the D’s in the end? It probably will actually, because of the snotty attitude that was telegraphed by Romney.
And it is pretty satisfying to see the R’s in disarray, calling for a campaign reorganization, etc. All because the thing they have been preaching for thirty years was actually spoken in public. What a f’d up party. What is also interesting is seeing who was willing to publicly excoriate Romney. It certainly seems to have a neocon flavor to it. Could it be that the neocons don’t really want Romney to win anyway?
There is a reason those 47% are not interested in his tax plan. He was part of the dismantling of our vibrant middle class which fuels our consumer economy. Sales at Tiffany’s and Gulfstream are doing very well but cannot support an economy like ours. Greed is NOT good.
@joanneleon: Yep, it’s entirely possible for a voter to believe (a) that Romney is a rich asshole; and (b) that poor people should pay more taxes and get fewer benefits. In fact, this is now the standard Democratic line, as support for the Catfood Commission shows.
i would like to know if this “47% don’t pay taxes” is accurate and if accurate
what does it really mean?
one possible fact arising from this might be that a fair proportion of americans lack the income to pay taxes, in short, are too damned poor to be able to pay any tax under our current standards.
the implications of this are far, far different from the line everyone seems to be implicitly accepting – that there are americans who are freeloaders, who take from the gov’t, but don’t give back.
paying taxes is a function, directly, of income, UNLESS you happen to be wealthy enough to use tax shelters.
looked at this way, wilbur’s argument might have been merely an attempt to divert attention from the real freeloaders in american society, the very rich like wilbur who routinely duck paying, collectively, billions in taxes annually. in short, wilbur, the poster child for tax shelters for the rich, is complaining about tax “shelters” we have enacted for those with low incomes
but back to my original concern – is romney’s statement accurate and, if so, what are the real implications that flow from this.
I find it interesting that, as yet, the Democrats, while denouncing Romney’s 47%er rhetoric, fail to point out that the Red States, mainly in the South, receive more Government largess per capita than Northern States. Pointing this out to rednecks in no uncertain terms would at least underscore their hypocrisy, if not change their vote. I guess the Dem’s figure the South is lost so why bother.
here’s a useful discussion of who pays taxes in the u.s. from
The Center on Budget and Policy Priorities:
Close to half of U.S. households currently do not owe federal income tax. The Urban Institute-Brookings Tax Policy Center estimates that 46 percent of households will owe no federal income tax for 2011.  A widely cited figure is a Joint Committee on Taxation estimate that 51 percent of households paid no federal income tax in 2009. (The TPC figure for 2009 also is 51 percent.) 
These figures are sometimes cited as evidence that low- and moderate-income families do not pay sufficient taxes. Yet these figures, their significance, and their policy implications are widely misunderstood.
■The 51 percent and 46 percent figures are anomalies that reflect the unique circumstances of the past few years, when the economic downturn greatly swelled the number of Americans with low incomes. The figures for 2009 are particularly anomalous; in that year, temporary tax cuts that the 2009 Recovery Act created — including the “Making Work Pay” tax credit and an exclusion from tax of the first $2,400 in unemployment benefits — were in effect and removed millions of Americans from the federal income tax rolls. Both of these temporary tax measures have since expired.
In 2007, before the economy turned down, 40 percent of households did not owe federal income tax. This figure more closely reflects the percentage that do not owe income tax in normal economic times.
■These figures cover only the federal income tax and ignore the substantial amounts of other federal taxes — especially the payroll tax — that many of these households pay. As a result, these figures greatly overstate the share of households that do not pay federal taxes. Tax Policy Center data show that only about 17 percent of households did not pay any federal income tax or payroll tax in 2009, despite the high unemployment and temporary tax cuts that marked that year. In 2007, a more typical year, the figure was 14 percent. This percentage would be even lower if it reflected other federal taxes that households pay, including excise taxes on gasoline and other items.
■Most of the people who pay neither federal income tax nor payroll taxes are low-income people who are elderly, unable to work due to a serious disability, or students, most of whom subsequently become taxpayers. (In years like the last few, this group also includes a significant number of people who have been unemployed the entire year and cannot find work.)
■Moreover, low-income households as a group do, in fact, pay federal taxes. Congressional Budget Office data show that the poorest fifth of households paid an average of 4.0 percent of their incomes in federal taxes in 2007, the latest year for which these data are available — not an insignificant amount given how modest these households’ incomes are; the poorest fifth of households had average income of $18,400 in 2007. The next-to-the bottom fifth — those with incomes between $20,500 and $34,300 in 2007 — paid an average of 10.6 percent of their incomes in federal taxes.
■Moreover, even these figures greatly understatelow-income households’ totaltax burden because these households also pay substantial state and local taxes. Data from the Institute on Taxation and Economic Policy show that the poorest fifth of households paid a stunning 12.3 percent of their incomes in state and local taxes in 2011.
■When all federal, state, and local taxes are taken into account, the bottom fifth of households pays about 16 percent of their incomes in taxes, on average. The second-poorest fifth pays about 21 percent.
The thing that bothers me the most is that they fail to mention that the people who don’t pay income tax now because they are elderly and live on Social Security already paid income taxes (or their spouse did)for all or much of their adult life, otherwise they would not be receiving Social Security.
I’ve seen it pointed out several times by commenters at news sites.
@joanneleon: Boss Rove is set to buy Jeb Bush in 2016.