On Taxes, More Than 47% Will Question Why Vote For Mitt Romney
Why vote for Mitt Romney? Mitt hit the fan this week with his comment that 47 percent of Americans will not vote for him no matter what. The leak of Romney’s comments at a private fundraiser, which ended up on Mother Jones, was the most damning secretly taped conversation since candidate Barack Obama made his condescending “God and guns” comment at a San Francisco fundraiser. All the silliness over secret tape recordings make George McGovern, who lost the 1972 election in a landslide, look like a hero after he told a heckler to his face during the last week of the campaign to “K.M.A.” Despite all the hype, Romney’s comment will have as little effect on the race as his energy plan or his comment earlier this year that “corporations are people, too.” But it is clear that the race, once Obama’s to lose, then to some (including me) looking like a Romney blowout, will be tight. So Romney’s assertion that 47 percent of the country is dependent on government was the biggest foot-in-mouth comment since the 41st president said he didn’t inhale. Sales of Tums and Rolaids must be spiking in the neighborhood around Romney’s campaign headquarters in Boston. It is true that 46 percent of federal income tax filers in 2011 paid no federal income tax, and that is justifiably cause for concern. As an issue of fairness, all citizens should have skin in the game, as our national defense, Social Security and medical care (over 60% of the federal budget) for the old and sick do not come free. Politicians of all stripes, including once Republican presidential frontrunner Michele Bachmann, have suggested that everyone pay something to the federal treasury - although Bachmann’s proposal to have a minimum of $10 paid to the feds was seen by some as a few french fries short of a Happy Meal. But the assertion that almost half of the country is paying nothing but living high off the government hog is a stretch. For one thing, half of the folks in this country who do not pay federal taxes are the working poor and low income workers who don't pay federal taxes due to the earned income tax benefit. Many of them are eligible for the record amount of SNAP (food stamp) benefits upon which a record number of Americans depend. While the cries about fostering dependency have merit, the stubborn fact persists that food stamps creates a steady business for agribusinesses and food retailers. And let’s not forget that many of the working poor do pay payroll taxes that go towards Social Security, Medicare and Medicaid--not to mention state and local sales taxes. Furthermore, 10 percent of the country that currently pays no taxes are elderly citizens--who incidentally paid taxes during their working lives. Not all Social Security benefits are tax free, and let’s not forget the millions of elderly who pay taxes, including my parents, every time they cash some of their retirement funds. Despite all the nuances, Romney’s now infamous 47 percent comment comes across as lumping retirees, who generally are in his corner, together with the working poor who might be more inclined to vote Democrat. One has to wonder if the headaches that came from this week’s gaffe will have other Romney staffers following Tim Pawlenty out the door. The flip side of Romney’s argument is that too few people are carrying the financial burden of too many. But even that argument, a favorite of the tea party crowd, does not stand up to the facts. For example, as the blogger D.R. pointed out on The Economist's blog, despite pleas to move towards a flatter tax, evidence suggests that tax rates are already relatively flat. Rounding up the numbers, the lowest 20 percent of income earners earn 3 percent of the income but pay 2 percent of the taxes; the middle 20 percent earn 11 percent and pay 10 percent; and the top 1 percent earn 21 percent and pay 22 percent. Our current tax system, of course, is insane. The scheme as we know it enriches accountants and the people who can afford to pay for the best. Which leads to the complaints that the U.S. is at a competitive disadvantage because of our taxes. The truth is that, compared to the rest of the industrialized world, our collective tax burden is benign - and is at a historic low compared to the past half century. And as far as corporate taxes go, those who say our corporate taxes are too high focus in on the statutory rate and not the effective rate after loopholes and credits. A flat tax sounds tempting--Jerry Brown based his 1992 presidential run on this idea, but the net effect would be massive tax increase on the majority of citizens. It is easy to blame politicians for our current fiscal woes, but much of the blame lies on voters. We want our benefits but do not want to pay for them; we demand countless write-offs, credits and refunds but then chafe at the legal and accounting industry we prop up as a result. Even though both Republicans and Democrats are to blame for the failure to implement any of the Simpson Bowles deficit reduction plan, the fact is voters would have resisted some of the castor oil that everyone would have had to swallow. Benefits of all kinds will require more premiums yet lower payments; retirement needs to be pushed back as many of us will live into our 80s and 90s; and the national defense has to be leaner and meaner. So if you want to vote for the best Republican in the race, consider a vote for Barack Obama. Never mind the Republican health care plan he pushed that resembles what the GOP wanted back in the mid-1990s; or the continued operation of Guantanamo Bay; and the relentless campaign against terrorists that are a holdover from the Bush years. When it comes to taxes, we are no where near the Republican confiscatory tax rates of Herbert Hoover or Dwight Eisenhower - and Ike, by the way, also pushed for a national health care plan. Taxes are low, and yes, slow growth has contributed to the deficits. But Romney’s plan to cut taxes even more will just blow up the deficit even more - and we are beyond the point where further taxes can stimulate the economy. A Romney would have made a great president--but George and Lenore are no longer with us. Speaking of which, look who was on welfare for a while:
Published earlier today on Triple Pundit. You can follow Leon Kaye on Twitter.
Photo courtesy Wikipedia.