Washington Examiner, By 10/13/15 –
This notion — that we need to ensure that everyone pays at least a little bit of income tax — has taken hold on the American Right. Presidential candidate Bobby Jindal is actually campaigning on it.
Jindal’s tax hike on the poor is actually the centerpiece of his plan. His “tax reform” webpage is headlined: “The Jindal Tax Reform Plan: Everyone Has to Have Some Skin in the Game.”
Jindal calls it “a terrible mistake” that about 40 percent of Americans — a bit less than the 47 percent that Mitt Romney wrote off — pay zero federal income tax.
“We simply must require that every American has some skin in this game. If we have generations of Americans who never pay any taxes, it will be very easy for them to turn a blind eye to absurd government spending and to continue to allow our government to bankrupt our nation.”
He concludes, sounding like Barney Frank or FDR: “There is great strength in shared sacrifice.”
Jindal’s intuition to worry about the moral effects of our tax code is not wrong. His specific worry, however — that those who don’t pay federal income tax will, per se, be warmer to big government — is unfounded. Many Republicans and conservatives make this assertion, but it isn’t based on evidence.
President Bush’s 2001 tax cuts knocked 8 million people off the tax rolls. Does Jindal have any evidence that those people soon dropped whatever previous concerns they might have had about big government? From 2002, the year after Bush’s tax cuts went into effect, to today, the percentage of Americans saying the government has too much power has grown steadily, from 39 percent to 60 percent.
Jindal is committing the same Hobbesian error as nearly all liberals and many economists on all sides when he implies a moral equivalence between paying no federal income tax and receiving some kind of handout. He says that having a personal exemption — which in effect creates a zero-percent tax bracket at very low income levels — splits the country into “the tax paying class and the dependent class.”
But a family of five earning 40,000 and owing zero, thanks only to personal and dependent exemptions and the standard deduction, isn’t “dependent” on government unless one presumes their earnings are really a gift from Obama.
Also, owing zero federal income tax doesn’t mean you don’t “sacrifice” for government. First, everyone already pays Social Security and Medicare tax, on their first dollar. (A real tax reform might add an exemption to those taxes too, though.) Everyone pays sales tax. Many people who owe no federal income tax still pay state or county income tax. Throw in excise taxes, tolls, property tax, gas tax and other government user fees, and it appears our low-income friends have plenty of “skin in the game.”
Since Jindal presents his tax reform as a moral matter, here’s a moral argument for something like our current system, with its effective zero-percent rate. In a wealthy country like ours, government shouldn’t take a person’s money until he has taken care of his own basic needs. Once he’s earning enough to afford some comforts, that’s when it’s reasonable to tax that top portion to cover the cost of government.
With no evidence behind that correlation, perhaps the true motivation is the concept of shared sacrifice — a noble idea on its own, which needs no pragmatic justification. But it seems a grave error to define “sacrifice” to mean simply and exclusively “federal income taxes.”
Timothy P. Carney, The Washington Examiner’s senior political columnist, can be contacted at email@example.com. His column appears Tuesday and Thursday nights on washingtonexaminer.com.