From the Wall Street Journal:
Now we know: 95% of Americans will get a “tax cut” under Barack Obama after all. Those on the receiving end of a check will include the estimated 44% of Americans who will owe no federal income taxes under his plan.
In most parts of America, getting money back on taxes you haven’t paid sounds a lot like welfare. Ah, say the Obama people, you forget: Even those who pay no income taxes pay payroll taxes for Social Security. Under the Obama plan, they say, these Americans would get an income tax credit up to $500 based on what they are paying into Social Security.
Just two little questions: If people are going to get a tax refund based on what they pay into Social Security, then we’re not really talking about income tax relief, are we? And if what we’re really talking about is payroll tax relief, doesn’t that mean billions of dollars in lost revenue for a Social Security trust fund that is already badly underfinanced?
I googled for some statement by the Obama campaign that FICA taxes will be reduced, and found nothing. Maybe your luck will be better, if you want to look. Possibly the genius who wrote the WSJ editorial has never looked at a standard paycheck and doesn’t realize that withheld income taxes and withheld FICA taxes are two separate line items and not the same thing. Can anyone else explain what this guy is talking about?
Further, it’s important to understand that in McCain World, payroll taxes are taxes paid by the employer and not the employee. In other words, the income taxes withheld from paychecks are not being “paid” by the employee. Hence, workers whose taxes are paid through payroll taxes do not actually pay taxes.
That’s where they’re coming up with “the estimated 44% of Americans who will owe no federal income taxes.” They “owe” no taxes because taxes are withheld from their paychecks, and they have no other income to declare.
[Update: The Anonymous Liberal says these are people who don’t earn enough to pay income taxes. Maybe, but are we talking apples and oranges? Is Obama talking about 95 percent of wage earners getting tax cuts, as he says, while McCain is talking about 44 percent of all Americans? I’ve never seen a paycheck so small that there wasn’t a teeny bit of income tax taken out of it.]
And in the minds of the conservative elite, such people do not deserve tax breaks. Giving them a tax reduction is welfare, since they didn’t pay taxes, anyway. And, in fact, a few days ago, some right-wing TV bobblehead actually said that most average-income bus drivers, teachers, and autoworkers “don’t pay any taxes.”
Of course, most working people don’t think that way. To most working people payroll tax deductions are taxes they pay. But to McCain, giving most working people a tax break amounts to “welfare,” because, you see, they don’t pay taxes. That makes a tax break for them a “transfer of wealth” and not a tax break.
A number of rightie bloggers have picked up this argument and are running with it, including Betsy Newmark, who says “Barack Obama is planning to give a tax break to [people who] don’t pay income taxes.” Betsy Newmark is a teacher. Very likely Betsy in the 44 percent.
And she doesn’t know. She assumes the “44 percent” are some other people, not her. As Atrios says,
I’m really never quite sure who this “don’t pay any taxes” stuff is aimed at. Though, thinking about it just this second, maybe I do. Basically everybody pays taxes. So you when you’re talking about giving free money to people who don’t pay any taxes, that must be somebody else because, you know, I pay taxes.
I suppose that works.
That’s exactly it. It must be some other bus divers, teachers and auto workers who don’t pay taxes. Or maybe the 44 percent are people who don’t work. But Obama specifically says his tax cuts are for working people. So that can’t be it.
Don’t any of these people, you know, think?