A Modest Proposal for Stimulating the Economy: Create More Taxpayers
posted at 5:40 pm on December 17, 2010 by Howard Portnoy
Earlier this afternoon President Obama signed into law the tax compromise he hammered out with Republicans, but not everyone was happy. Neither incoming House Speaker John Boehner nor outgoing Speaker Nancy Pelosi attended the signing ceremony, albeit for diametrically opposite reasons. Boehner’s absence was a protest to the bill’s inclusion of an additional $313 billion of stimulus, Pelosi’s an expression of dissatisfaction that the bill doesn’t stick it to the top two percent of taxpayers.
That idea—sticking it to the wealthiest Americans—has been a liberal mantra for some time now. In September of 2008, then-Vice President candidate Joe Biden said that paying taxes is an act of “patriotism” for wealthier Americans. In the years since, Democrats have spoken in glowing terms of “economic equality,” a concept that dovetails neatly with Barack Obama’s grand vision of redistributing wealth by raising taxes on Americans earning more than $250,000 a year while cutting taxes for the rest.
As the country slips deeper into debt, the notion of everyone paying his fair share admittedly has merit. But instead of targeting taxpayers who earn a quarter million—which includes the engine of job creation, small business owners—why not go after the millions of Americans who pay no federal income tax at all?
Rodney Mock, who teaches accounting at a California University, has proposed increasing the tax base to those Americans who currently get a “free ride” while availing themselves of the same government services as those of us who write checks to Uncle Sam each April. Mock writes:
In 2008, according to the Tax Foundation and the IRS Office of Statistics of Income, there were 51.6 million individual income tax filers with absolutely no federal income tax obligation. That figure means that more than 36% of all Americans filing tax returns paid absolutely nothing into the system.
If that weren’t bad enough, the number of Americans paying zero in federal income tax has been growing substantially over the years. But it gets even worse. Because of the way the current tax system is set up, not only do many Americans pay no taxes, but our federal government (aka we, the taxpayers) actually pay them through “refundable” tax credits.
With an earned income credit as high as $5,666 for taxpayers with three or more children, plus a $1,000 per child tax credit, a couple with two children can make over $50,000 and pay nothing in federal income tax. Does that conform to anyone’s standard of fairness? Concludes Mock:
[R]ather than focusing on extending tax cuts, [perhaps President Obama and members of Congress] would be better served by … creating more “taxpayers,” reducing taxes on those currently subject to taxation and making over $50,000, and preserving the status quo for the über-rich.