by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Should Republicans worry — as Mitt Romney apparently did — that the 47 percent or so of Americans who pay no income tax are lost forever to the Democrats and their big-government promises? Tim Carney doesn’t think so. He explains why in a blog entry for the Washington Examiner.
What evidence is there that knocking people off the income tax rolls makes them warmer to big government or less concerned about federal spending? As Ramesh Ponnuru asked at the American Enterprise Institute when discussing Mike Lee’s tax plan, did expanding the child tax credit make middle-class parents more liberal?
Here’s one theoretical scenario of the 47 percent who pay no income tax:
A married couple living outside of Bloomington, Indiana. The husband has a pretty good job, and he makes $58,000 a year while she stays home and raises the kids. In the suburbs of Bloomington, that’s enough to live a nice, middle-class life in a three-bedroom home.
The personal exemption is $3,900, which, times five, means their first $19,500 is tax-exempt. The standard deduction for married couples is $12,200. Let’s say the two of them pay about $500 in student-loan interest a year. Their total taxable income is $25,800.
The first $17,850 is taxed at 10 percent, meaning $1,785 in taxes. The rest is taxed at 15 percent, adding $1,192.50 to their tax bill, for a grand total of $2,977.50.
But in comes the child tax credit to the rescue! At $1,000 per kid, this reduces their federal income tax to zero.
Of course, they still pay Social Security tax, Medicare tax, sales tax, state income tax, excise tax, and if they own their home, they pay property taxes.
Does their zero dollars in federal income tax mean they don’t really care how the federal government spends its money? I doubt it. I doubt these people feel like non-taxpayers.