Speculation is afoot that Romney's 2009 federal income tax form reveals no tax burden at all.
If this reasonable supposition is accurate, Etch-a-Sketch has no choice but to keep them hidden - or unleash a kind of "class war," culminating with his November defeat.
Bruce Bartlett held senior policy roles in the Reagan and George H.W. Bush administrations and served on the staffs of Representatives Jack Kemp and Ron Paul. He is the author of “The Benefit and the Burden: Tax Reform — Why We Need It and What It Will Take.”
An oft-repeated Republican talking point is that close to half of all federal income tax filers have no tax liability. Prominent Republicans often imply that these people ought to be paying federal income taxes — and that they don’t is a major cause of the budget deficit.
Last year, Senator Orrin Hatch of Utah, the ranking Republican on the tax-writing Senate Finance Committee, declared that taxes on the rich should not be raised until the poor are taxed. “I think many taxpayers are skeptical that the answer to our fiscal problems is for them to sacrifice more, when almost half of all households are not paying any income taxes,” Mr. Hatch said.
In April, Representative Eric Cantor of Virginia, the House majority leader,said it was “unfair” that 45 percent of people don’t pay any federal income taxes. Asked if he wanted to increase taxes on these people, he replied, “You’ve got to discuss that issue.”
In May, Richard Mourdock, the Republican Senate nominee in Indiana, likened the current split between taxpayers and nontaxpayers to the pre-Civil War division of the nation between slave and free. Consciously using Abraham Lincoln’s famous “house divided” terminology from 1858, Mr. Mourdock said, “When 47 percent are paying no income taxes — they do pay Social Security, but they are not paying income taxes — and 53 percent are carrying the load, we are a house divided.”
In a McClatchy-Marist College poll in early November, 71 percent of Republicans said they believed the poor should not be exempt from income taxes and only 26 percent said they thought the poor should not have to pay them.
This is ironic, because two of the measures most responsible for the rise in the number of nontaxpayers are the earned income tax credit and the child credit — both Republican initiatives. Together they account for 30 percent of the nontaxpaying population, according to the Tax Policy Center.
Once upon a time, Republicans were more concerned about the number of rich people with no income tax liability.
On Jan. 17, 1969, just days before Richard Nixon’s inauguration, the departing treasury secretary, Joseph Barr, disclosed that in 1967, 155 Americans with an income of more than $200,000 had no income tax liability, including 21 with an income above $1 million.
This was considered such a scandal that Nixon sent a tax package drafted by the Johnson administration to Congress with his endorsement. When the Tax Reform Act of 1969 was enacted, including a minimum tax to force rich people to pay something, he praised that provision.
As Nixon said in his signing statement:
A large number of high-income persons who have paid little or no federal income taxes will now bear a fairer share of the tax burden through enactment of a minimum income tax comparable to the proposal that I submitted to the Congress, which closes the loopholes that permitted much of this tax avoidance.
Ronald Reagan defended his tax reform proposal on the grounds that it would reduce the number of nontaxpaying rich people. In a June 6, 1985, speech, he said:
We’re going to close the unproductive tax loopholes that have allowed some of the truly wealthy to avoid paying their fair share. In theory, some of those loopholes were understandable, but in practice they sometimes made it possible for millionaires to pay nothing, while a bus driver was paying 10 percent of his salary, and that’s crazy. It’s time we stopped it.
Among the specific measures Reagan supported to increase tax fairness was an increase in the tax on capital gains to 28 percent from 20 percent.
The Nixon and Reagan initiatives were unsuccessful in eliminating nontaxpayers among the well to do, and in recent years the number has risen sharply, especially after enactment of the 2003 tax bill, which sharply lowered taxes on the wealthy by dropping the tax rate on both stock dividends and capital gains to 15 percent, from 35 percent and 20 percent, respectively.
According to newly released data from the Internal Revenue Service, the number of tax filers with no federal income tax liability among those with an income of $200,000 or more has risen to more than 20,000, just over half of 1 percent of all those with an income over $200,000. In 2009, about four million returns listed such an income out of 140 million total returns.
The data also show that among those with an income over $200,000, many paid relatively low tax rates: 3.3 percent paid less than 10 percent, 10 percent paid 10 to 15 percent, 37.2 percent paid 15 to 20 percent, 30.4 percent paid 20 to 25 percent and 16.7 percent paid 25 to 30 percent. Just 2.4 percent paid more than 30 percent.
Republicans are always quick to attack Democrats for waging “class warfare” whenever they suggest that the wealthy ought to pay more taxes to help reduce the deficit and prevent the decimation of programs to aid the poor.
But Republicans also engage in class warfare when they suggest that the poor are to blame for deficits because so few pay federal income taxes. Those among the wealthy who are paying no income taxes at least deserve equal time.