Saturday, August 20, 2011

Half of Us Pay No Income Tax

Give Them Jobs and They Will Be Happy to Pay

            A recent talking point of the Republican Party is that something like half of our citizens are not paying income taxes. Gov. Rick Perry, R-TX, a recent addition to the GOP presidential candidate loony bin, said he was “dismayed by the injustice” of this fact.
            It is a fact, and it is a dismaying fact, but not for the reason Perry gives – that it’s an injustice. What is dismaying is that half of our people make so little money that they don’t have to pay income tax.
            You know from filling out your own tax forms how much you have to make to pay income tax: more than the standard deduction. That’s $11,600 per adult and $3,700 (actually an exemption and not a deduction) per child. That allows a typical family of four to make $30,600 that’s not subject to income tax.
            These numbers are scarcely larger than the federal government’s poverty guidelines, published annually by the Department of Health and Human Services. The corresponding figures in the 2011 chart are $10,890 for an adult and $22,350 for a family of four. (The figures are higher in Alaska and Hawaii.)
            What these numbers tell us is that about half of our people are in poverty or damned close to it, and that is truly dismaying.
            This is not to say that these people pay no taxes. There are no deductions for Social Security and Medicare contributions, and those in poverty pay a high percentage of their income in sales taxes because they essentially spend all of their money. They don’t have money to invest, so they can’t take advantage of reduced capital gains taxes. They don’t have money to hire tax attorneys, so they often don’t know about ways to reduce their tax expenses.
            These are the people Perry and others are disparaging for not paying their fair share of the cost of government. Income inequality is greater now than it has been since the Great Depression, and this is the result. Capital is lording over Labor, and setting the agenda in Congress and state governments. Don’t you dare increase taxes on the wealthy, they say – go get what you need from all those freeloaders who aren’t paying their share.
            What we should be doing is providing these people with jobs, good jobs, so they can begin to pay taxes and, more importantly, participate in the “American Dream.”
            The increase in the number of those in poverty did not come from those who have more than they need. It came from the middle class. Until St. Ronald Reagan became president in 1981, our middle class was growing. He set about to dismantle it, his followers have continued the process, and they have just about succeeded.
            There are things we can do to reverse this trend. We can stop giving corporations tax breaks for moving jobs out of the country. We can increase tariffs on goods produced by workers without the basic benefits we require for our own workers. We can give tax breaks to companies that increase domestic jobs. We can adjust the tax rates on the very wealthy and on corporations.
            You will notice that every one of these actions is opposed by the Republican Party and the Tea Party, but I think the electorate is beginning to realize that their positions on these issues are really hurting the United States.
            I think the basic definition of a Third World country is that it has a tiny but strong wealthy class and a huge but weak working class. The Republican Party has worked for years to create just that – a Third World country – in the United States of America. It will succeed if we let it.