Elderly Americans and low-wage workers make up the bulk of those who don’t pay income taxes, a group that Republican presidential nominee Mitt Romney said are “dependent on government” and see themselves as “victims.”
For 2011, 46 percent of households didn’t pay federal income taxes. About half of those didn’t pay because of standard deductions and personal exemptions designed to exclude subsistence levels of income from taxation.
The rest received tax breaks, including the earned income tax credit, the child tax credit and tax benefits for older Americans such as the exclusion of Social Security benefits from income. This group still paid state and local taxes and payroll taxes.
“Half of them are people that are just plain old poor,” said Roberton Williams, a senior fellow at the Tax Policy Center, a nonpartisan group in Washington. “And the other half are people that aren’t very far out of that poor category, but get some tax breaks.”
Romney’s comments echoed statements that other Republicans have made, including Senator Orrin Hatch of Utah, about the increase in the number of people who don’t pay income taxes. Hatch has maintained since last year that it would be easier to restrain federal spending if everyone paid at least something in income taxes and had more of a stake in the tax system.
At a private fundraiser in May, Romney used the 47 percent number — a tax figure taken from an earlier year — to describe the group of Americans most likely to support President Barack Obama. A video of the speech was obtained by Mother Jones magazine.
Non-payers aren’t the same people each year, Williams said. Households that don’t pay income taxes one year because of job loss, for example, may pay again when they find work. People come onto the tax rolls as they leave school, pay more as they earn more, pay less as they have children and move off the tax rolls as they age and stop working.
Romney described non-payers as being dependent on government and feeling entitled to government-provided health care, housing and food assistance.
“Mr. Romney doesn’t know what this country looks like, and he has no idea how government works,” Richard Armitage, former deputy secretary of state in the administration of George W. Bush and a former top Defense Department official, said in an interview today. “The veterans who serve 20 years or more in the service, they get benefits — that’s government money.”
The federal government provides food stamps to 46.7 million people, or about 15 percent of the population. As of last year, 48.8 million people were enrolled in Medicare, the health program for the elderly.
The percentage of households that don’t pay income taxes remained at about 20 percent during the 1970s and 1980s before increasing in the 1990s, according to a report by the Tax Foundation, which favors a simpler, flatter tax system.
The report cites policies that were favored by lawmakers in both parties. The child tax credit of $500 per person, for example, was created in 1997 under a Republican Congress and during the administration of Democratic President Bill Clinton.
The tax cuts proposed by Bush in 2001 doubled the credit. Changes backed by Obama and congressional Democrats in 2009 made more of the tax credit refundable for low-income families.
“We’re doing social policy through the tax system that results in this kind of outcome,” Williams said, noting that if the government sent people benefit checks for each child, the economic effect would be the same and the tax data would be
According to the Tax Foundation, states with the highest concentrations of non-payers are Mississippi, Georgia, and Arkansas. The lowest concentrations are in Alaska, Massachusetts and Connecticut.
In a news conference last night, Romney stood by his remarks and said he could have phrased them better.
“My discussion about lowering taxes isn’t as attractive to them, and therefore I’m not likely to draw them into my campaign, as effectively as those who are in the middle,” he said.
Romney has proposed cutting all income tax rates by 20 percent and eliminating or curtailing tax breaks.