Romney’s theory of the “taker class,” and why it matters

"My job is not to worry about those people,” Mitt Romney said of the 47 percent of Americans who are likely to vote for Barack Obama. “I'll never convince them they should take personal responsibility and care for their lives."

There will be plenty said about the politics of Romney’s remarks. But I want to take a moment and talk about the larger argument behind them, because this vision of a society divided between "makers" and "takers" is core to the Republican nominee's policy agenda.

In his comments, Romney says that “these are people who pay no income tax," but they are people “who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it.”

In other words, Romney is arguing that about 47 percent of the country is a “taker class” that pays little or nothing into the federal government but wants to tax the productive classes for free health care, food, housing, etc.

Romney is not alone in this concern. “We’re dismayed at the injustice that nearly half of all Americans don’t even pay any income tax,” Texas Gov. Rick Perry said when he began his presidential campaign. “We’re coming close to a tipping point in America where we might have a net majority of takers versus makers in society,” Rep. Paul Ryan said at the Heritage Foundation. “People who pay nothing can easily forget the idea that there is no such thing as a free lunch,” warned Rep. Michelle Bachmann.

Tax Policy Center

For what it's worth, this division of "makers" and "takers" isn't true. Among the Americans who paid no federal income taxes in 2011, 61 percent paid payroll taxes -- which means they have jobs and, when you account for both sides of the payroll tax, they paid 15.3 percent of their income in taxes, which is higher than the 13.9 percent that Romney paid. Another 22 percent were elderly.

So 83 percent of those not paying federal income taxes are either working and paying payroll taxes or they’re elderly and Romney is promising to protect their benefits because they've earned them. The remainder, by and large, aren’t paying federal income or payroll taxes because they’re unemployed. But that's a small fraction of the country.

Behind this argument, however, is a very clever policy two-step that's less about who pays taxes now and more about who is going to pay to reduce the deficit in the coming years. Here's how it works.

Part of the reason so many Americans don't pay federal income taxes is that Republicans have passed a series of very large tax cuts that wiped out the income-tax liability for many Americans. That's why, when you look at graphs of the percent of Americans who don't pay income taxes, you see huge jumps after Ronald Reagan's 1986 tax reform and George W. Bush's 2001 and 2003 tax cuts. So whenever you hear that half of Americans don't pay federal income taxes, remember: Ronald Reagan and George W. Bush helped build that. (You also see a jump after the financial crisis begins in 2008, but we can expect that to be mostly temporary.)

Some of those tax cuts for the poor were there to make the tax cuts for the rich more politically palatable. "Do you think we wanted to include a welfare payment to people who don't pay taxes and call it a tax cut?" A top Bush administration official once asked me. "No. But that's what we needed to do to get it done."

But now that those tax cuts have passed and many fewer Americans are paying federal income taxes and the rich are paying a much higher percentage of federal income taxes, Republicans are arguing that these Americans they have helped free from income taxes have become a dependent and destabilizing "taker" class who want to hike taxes on the rich in order to purchase more social services for themselves. The antidote, as you can see in both Paul Ryan and Mitt Romney's policy platforms, is to further cut taxes on "job creators" while cutting the social services that these takers depend on. That way, you roll the takers out of what Ryan calls "the hammock" of government and you unleash the makers to create jobs and opportunities.

So notice what happened here: Republicans have become outraged over the predictable effect of tax cuts they passed and are using that outrage as the justification for an agenda that further cuts taxes on the rich and pays for it by cutting social services for the non-rich.

That's why Romney's theory here is more than merely impolitic. It's actually core to his economic agenda.

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