It strikes me that many on the rightward side of our political debate has a message problem that they are creating by proffering two basic narratives on taxes.  The first is that we in the United States are over-taxed, and therefore the Congress should, at a minimum, hold taxes steady and, preferably, cut them.  The second narrative is that almost half of taxpayers pay no federal income tax and that this is an inherent unfairness that needs to be rectified because its inherent unfairness.

Now, it is a tough circle to square to say that we simultaneously ought to cut taxes and also say that a lot of us are radically under-taxed.   People do realize that while, yes, one could cut the tax rates on the 53% that end up paying federal income taxes, that that still doesn’t solve their objections that a lot of people aren’t paying their fair share.  

As such, it is worth noting that the only policy that logically fixes the objections in question is, at a minimum, raising taxes on the middle and lower classes (which would solve the 47% who don’t pay federal income taxes) and to really achieve what appears to be Republican goals is to both raise taxes on the middle and lower classes and to cut taxes on high income earners.  Good luck winning back Congress on that platform.

All of this results in years of adding various deductions and credits to our highly complex tax code.  A lot of it boils down to things like marital status and how many kids one has, for example, my wife and I pay far less federal income taxes than we otherwise would because of our three children.  Or, I can turn back the clock to 1998 for a direct comparison:  when James Joyner and I were hired at what was then known as Troy State University, he and I made the exact same amount of money and yet, because I was married with one child, I paid less federal income taxes than did he.  Now, one can debate the fairness of that fact, but in cold, hard political calculations, I don’t see the Republicans going out and in the name of tax fairness arguing to do away with standard deductions for dependents or for the elimination of various tax credits linked to children.

I would be remiss if I did not note that while I recognize the issue with the income taxes, it should be noted that many use that stat (the 53% who pay v. the 47% who do not) to make it sound like 47% of the population aren’t paying taxes.  This is not the case.  It is a mistake to dismiss federal payroll taxes, not to mention the plethora of other taxes we all pay.¹  It is worth noting, for example, that as a percentage of GDP, payroll taxes almost are as big a bite as income taxes (see the chart below).²

And while I have the chart up, I would note that the actual amount of taxes collected, as a percentage of GDP, hasn’t gone up of late-indeed it has gone down (due to the recession) and projections into the future are well within recent norms.  We can debate whether that number is appropriate and whether or not the current distribution of taxation is fair or not.  However, what we cannot say (contra, for example, most Tea Party rhetoric of late) is that we are in a new, unprecedented era of high taxes.

And yes, by the way, I am aware of the argument that payroll taxes lead to direct benefits (social security payments and Medicare) while general income taxes do not.  However, it is not a one-to-one pay-in and pay-out and really, the funds are treated, for all practical purposes, like general revenue.  Further, entitlements are rather major parts of the budget, so pretending like we are talking about two discrete pots of money that go to utterly distinct policy outlays is simply a mistaken approach that obfuscates fiscal policy realities.

1. See, for example, the NYT today:  Yes, 47% of Households Owe No Taxes. Look Closer. [↩]
2. Chart via 538, data via the Tax Policy Center. [↩]