A recurring rant of mine in this space has been about the fallacious—and, it must be said, immoral—rhetoric of Reverse Class Warfare: the idea that Americans with net-zero federal income-tax liability are "mooches."
Ramesh Ponnuru has a brave and well-considered piece in the current print edition of National Review that demolishes what he calls the "Freeloader Myth."
First he breaks down the various and sundry reasons why a segment of Americans pay no federal income taxes:
According to the Tax Policy Center, provisions of the tax code that exempt subsistence levels of income from income taxes—the standard deduction, personal exemption, and dependent exemption—are the reason for about half of the tax filers who owe no income tax. Another large group of filers pays no income tax because its members are elderly and benefit from such features of the code as the non-taxation of some Social Security benefits. The tax credit for children and the earned-income tax credit, an effort to boost the pay of low-income workers, wipe out income-tax liability for other taxpayers. ... Other provisions of the code account for the rest of the 47 percent: education credits, the non-taxation of welfare payments, itemized deductions, and so on.
Next he argues for the relevance of payroll taxes (the "FDR trap" was news to me):
The point of the payroll tax, for FDR, was to ensure that "no damn politician" could ever take away the benefits because (to paraphrase conservative author William Voegeli) all the damn voters would think they had earned those benefits through their payroll taxes. All federal taxes go to the federal government, and all federal spending comes from it: The rest is accounting, and accounting tricks. People who pay payroll taxes are funding the federal government, and conservatives who deny it are falling for a trap FDR set for them.
Finally, Ramesh tries to reorient the debate away from the clash between 53 percent vs. 47 percent (a number that fluctuates over time and economic circumstances) and toward a more comprehensive picture of who "takes" from the federal government (hint: it's not just 47-percenters and Democrats):
The ten states with the highest number of non-payers are a strongly Republican bunch: Eight of them went for John McCain in 2008, and nine of them have Republican governors. Keith Hennessey, an economic adviser in George W. Bush's administration, notes that the historical data suggest that the child credit was the main reason for the increase in the number of non-payers between 1995 and 2007. If the conservative story about falling income-tax rolls is true, then, we should expect to see middle-income parents moving left, compared with the general electorate, during that period. There is no evidence that anything of the sort has happened.
And the kicker:
It is entirely plausible that receiving benefits from the government biases some beneficiaries against needed reforms, and that the problem grows more acute the more beneficiaries there are. Surely this is the real cause for concern: Conservatives cannot really believe that it was a flaw in America's founding that nobody paid income taxes to the federal government for almost all of the country's history before the welfare state.
Read the whole thing.
Thank you, Ramesh.