Everyone Should Pay. It's Only 'Fair.'

Among tax plans offered by GOP candidates, the most noteworthy is not Hermann Cain's 9-9-9 or Rick Perry's optional 20% flat tax, and certainly not Mitt Romney's "hold the line" approach of maintaining the status quo.  It is Michele Bachmann's principled insistence that every American should pay something, "if only ten dollars."

Bachmann's plan is a thoughtful response to a fatal flaw in the current system under which 47% of American adults pay no federal income taxes whatsoever.  Along with standard deductions, non-refundable deductions reduce tax owed to zero for a growing share of Americans.  These include credits for child care, education, retirement contributions, elderly and disabled status, and clean energy.

Not only do half of Americans pay zero, but a large percentage of them benefit from an array of refundable tax credits offering tax "refunds" for individuals who paid no tax to begin with: in other words, welfare.  These refundable tax credits include, among others, the earned income credit, making work pay credit, adoption credit, additional child tax credit, first-time homeowner credit, health coverage credit, and the American Opportunity credit -- a stimulus-funded credit that extends Hope Scholarships to a larger number of taxpayers (or, as it is, non-taxpayers).  Not only has the list of refundable tax credits has expanded dramatically under the Obama administration, but the refundable amounts have increased as well.  The tax code has become Obama's means of restoring "welfare as we knew it."

As it stands, the 50% who pay nothing, especially those who receive refundable tax credits, have a strong incentive to raise taxes on those who still pay.  For 2011, refundable tax credits kick in for married couples with incomes up to $49,078.  By some odd coincidence, that figure is almost identical to median family income of $49,445 (2010 figure).

One would imagine that someone in Washington had divided Americans precisely into two income groups and adjusted the tax code to subsidize half of Americans at the expense of the other.

As the number who pay nothing rises, the political will to raise taxes on the middle class and upper middle class only increases.  Gradually, more and more of what Americans earn goes to support an underclass that is becoming an oppressive majority.  For progressives, this is what is meant by "fairness."  As Rep. Steny Hoyer wrote on April 18, 2011, this year's federal tax deadline, the "fairer way" to reform the tax code is to "keep the tax code progressive" by eliminating loopholes and thereby raising taxes on the rich.

This is President Obama's plan as well.  All of his tax reform proposals so far, including his debt reduction negotiations with House Speaker Boehner, have included demands for immediate tax increases on wealthier Americans coupled with bogus spending cuts scheduled to begin long after he leaves office -- which is to say, never.  The effect of these proposals would be to raise taxes on our most productive citizens while expanding refundable tax credits and other forms of assistance.  That is not reform -- it is a continuation of the long march toward socialism.

As it is, the current tax code creates an incentive not to work or to work less.  The 2011 federal head of household standard deduction is $7,850 for individuals and $13,200 for married couples filing jointly.  Combined with a number of "above the line" deductions and credits for everything from alimony to traditional IRAs to earned income credits, the tax liability can be essentially eliminated for those earning modest incomes.  But if those same persons were to boost their income -- from $30,000 to $60,000, for example -- most of those credits and deductions would be phased out.  Clearly, the tax code is constructed so as to disincentivize work.  No wonder that the civilian labor force participation rate now stands at 64.2%, the lowest in 11 years.

Bachmann's plan addresses these problems.  It broadens and flattens the tax code by requiring all earners to pay something.  It helps eliminate the disincentive to work and the political interest of non-payers in raising taxes on the other half.  But calling for taxation of those whom the president calls the "working poor" takes courage -- a lot more than exempting them from taxes and spooning out welfare benefits by way of refundable tax credits and direct assistance.  Obama's plan of raising taxes on hardworking Americans and passing it out to his political base of welfare clients and crony capitalists requires no political courage at all.  It reflects only expediency.  With his plan, Obama would bankrupt half the population and corrupt the rest -- all for the sake of securing his own power for a few more years.

Bachmann's plan, on the other hand, represents a bold and courageous attempt to restore balance and real "fairness" to the federal tax code before it is too late.  By imposing a small tax on those who currently pay nothing, her plan would give all working Americans "skin in the game" and thereby build a stronger consensus against further tax increases.  It would also create a stronger incentive for the poor to educate themselves, retrain, and work harder knowing that their efforts would be rewarded.

Unfortunately, Bachmann's bold tax plan is one of the reasons she will never be elected president or, for that matter, receive the GOP nomination.  She is a candidate who is simply too honest and intelligent for her own good.  Bachmann is telling Americans what they need to hear, but it's the last thing that voters -- or half of them at least -- want from a presidential candidate.

Jeffrey Folks is the author of many books on American culture, most recently Heartland of the Imagination (2011).

Among tax plans offered by GOP candidates, the most noteworthy is not Hermann Cain's 9-9-9 or Rick Perry's optional 20% flat tax, and certainly not Mitt Romney's "hold the line" approach of maintaining the status quo.  It is Michele Bachmann's principled insistence that every American should pay something, "if only ten dollars."

Bachmann's plan is a thoughtful response to a fatal flaw in the current system under which 47% of American adults pay no federal income taxes whatsoever.  Along with standard deductions, non-refundable deductions reduce tax owed to zero for a growing share of Americans.  These include credits for child care, education, retirement contributions, elderly and disabled status, and clean energy.

Not only do half of Americans pay zero, but a large percentage of them benefit from an array of refundable tax credits offering tax "refunds" for individuals who paid no tax to begin with: in other words, welfare.  These refundable tax credits include, among others, the earned income credit, making work pay credit, adoption credit, additional child tax credit, first-time homeowner credit, health coverage credit, and the American Opportunity credit -- a stimulus-funded credit that extends Hope Scholarships to a larger number of taxpayers (or, as it is, non-taxpayers).  Not only has the list of refundable tax credits has expanded dramatically under the Obama administration, but the refundable amounts have increased as well.  The tax code has become Obama's means of restoring "welfare as we knew it."

As it stands, the 50% who pay nothing, especially those who receive refundable tax credits, have a strong incentive to raise taxes on those who still pay.  For 2011, refundable tax credits kick in for married couples with incomes up to $49,078.  By some odd coincidence, that figure is almost identical to median family income of $49,445 (2010 figure).

One would imagine that someone in Washington had divided Americans precisely into two income groups and adjusted the tax code to subsidize half of Americans at the expense of the other.

As the number who pay nothing rises, the political will to raise taxes on the middle class and upper middle class only increases.  Gradually, more and more of what Americans earn goes to support an underclass that is becoming an oppressive majority.  For progressives, this is what is meant by "fairness."  As Rep. Steny Hoyer wrote on April 18, 2011, this year's federal tax deadline, the "fairer way" to reform the tax code is to "keep the tax code progressive" by eliminating loopholes and thereby raising taxes on the rich.

This is President Obama's plan as well.  All of his tax reform proposals so far, including his debt reduction negotiations with House Speaker Boehner, have included demands for immediate tax increases on wealthier Americans coupled with bogus spending cuts scheduled to begin long after he leaves office -- which is to say, never.  The effect of these proposals would be to raise taxes on our most productive citizens while expanding refundable tax credits and other forms of assistance.  That is not reform -- it is a continuation of the long march toward socialism.

As it is, the current tax code creates an incentive not to work or to work less.  The 2011 federal head of household standard deduction is $7,850 for individuals and $13,200 for married couples filing jointly.  Combined with a number of "above the line" deductions and credits for everything from alimony to traditional IRAs to earned income credits, the tax liability can be essentially eliminated for those earning modest incomes.  But if those same persons were to boost their income -- from $30,000 to $60,000, for example -- most of those credits and deductions would be phased out.  Clearly, the tax code is constructed so as to disincentivize work.  No wonder that the civilian labor force participation rate now stands at 64.2%, the lowest in 11 years.

Bachmann's plan addresses these problems.  It broadens and flattens the tax code by requiring all earners to pay something.  It helps eliminate the disincentive to work and the political interest of non-payers in raising taxes on the other half.  But calling for taxation of those whom the president calls the "working poor" takes courage -- a lot more than exempting them from taxes and spooning out welfare benefits by way of refundable tax credits and direct assistance.  Obama's plan of raising taxes on hardworking Americans and passing it out to his political base of welfare clients and crony capitalists requires no political courage at all.  It reflects only expediency.  With his plan, Obama would bankrupt half the population and corrupt the rest -- all for the sake of securing his own power for a few more years.

Bachmann's plan, on the other hand, represents a bold and courageous attempt to restore balance and real "fairness" to the federal tax code before it is too late.  By imposing a small tax on those who currently pay nothing, her plan would give all working Americans "skin in the game" and thereby build a stronger consensus against further tax increases.  It would also create a stronger incentive for the poor to educate themselves, retrain, and work harder knowing that their efforts would be rewarded.

Unfortunately, Bachmann's bold tax plan is one of the reasons she will never be elected president or, for that matter, receive the GOP nomination.  She is a candidate who is simply too honest and intelligent for her own good.  Bachmann is telling Americans what they need to hear, but it's the last thing that voters -- or half of them at least -- want from a presidential candidate.

Jeffrey Folks is the author of many books on American culture, most recently Heartland of the Imagination (2011).