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Wednesday, September 19, 2012

It's Always a Bad Idea to Disparage Voters

"And what I said on election night was, even though you didn't vote for me, I hear your voices and I'm going to work as hard as I can to be your president." ~ President Obama

"I'm not going to get" votes from Americans who believe government's job is to redistribute wealth." ~Mitt Romney 

A huge swath of the people who don’t pay federal income taxes live in the Deep South or are elderly.

President Obama is unpopular with both groups.

And, both groups will likely vote for Mitt Romney.

"Romney seems to have contempt not just for the Democrats who oppose him, but for tens of millions who intend to vote for him." ~ Bill Kristol

“In 1969, Treasury Secretary Joseph Barr announced that 155 households with incomes over $200,000 paid no income tax. Outrage spawned the birth of the Alternative Minimum Tax (AMT) to ensure that rich Americans paid their fair share.  We established the Alternative Minimum Tax to ensure that the rich pay taxes, like the rest of us.  Today we have thousands of millionaires paying no taxes, and this is with the Alternative Minimum Tax in place. If these people are acting legally, then they have every right to lawfully reduce their tax burden. But we worry about all these people who are zeroed out.  There are as many people making between $100,000 and $200,000 a year as there are with incomes in the $20,000s.  One third of the country makesunder $20K. Half the country makes between $20K and $100K. If you report cash income in the triple digits, then congratulations! Your cost-of-living notwithstanding, you're in the top sixth of earners.” 

You could say that the entitlement state is growing at an unsustainable rate and will bankrupt the country. You could also say that America is spending way too much on health care the elderly and way too little on young families and investments in the future.
But these are not the sensible arguments that Mitt Romney made at a fund-raiser earlier this year. Romney, who criticizes President Obama for dividing the nation, divided the nation into two groups: the makers and the moochers. Forty-seven percent of the country he said, are people “who are dependent upon government, who believe they are victims, who believe the government has a responsibility to take care of them, who believe they are entitled to health care, to food, to housing, to you name it.”
This comment suggests a few things. First, it suggests that he really doesn’t know much about the country he inhabits. Who are these freeloaders? Is it the Iraq war veteran who goes to the V.A.? Is it the student getting a loan to go to college? Is it the retiree on Social Security or Medicare?

Conservatives like the Weekly Standard’s Bill Kristol and Wall Street Journal columnist Peggy Noonan continue to question Mitt Romney’s choice of words in discussing the 47 percent.  

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The people who receive the disproportionate share of government spending are not big-government lovers. They are Republicans. They are senior citizens. They are white men with high school degrees. As Bill Galston of the Brookings Institution has noted, the people who have benefited from the entitlements explosion are middle-class workers, more so than the dependent poor.   There’s no way thecountry will trust the Republican Party to reform the welfare state if that party doesn’t have a basic commitment to provide a safety net for those who suffer for no fault of their own.   

Poetic Justice

Now How Did This Happen?

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Thanks to numerous tax breaks and loopholes, corporations rarely pay the full corporate income tax rates.  Many of the nation’s largest companies are paying little or no federal taxes at all.  Corporations have been paying a lower share of our nation’s total taxes.  Corporate taxes fell from 26.4 percent of total tax revenue in 1950 to just 7.4 percent of total tax revenue in 2010.  During this same period, personal income, Social Security and Medicare taxes increased from 51.4 percent to 83.8 percent of total tax revenue.  A 2011 report by Citizens for Tax Justice and the Institute on Taxation and Economic Policy found that 78 of 280 of the nation’s largest and most profitable companies paid no federal income taxes in at least one of three years.  

Consider the 76 million people who don't legally owe individual income taxes in 2011 (please, please note: does not include payroll, excise, state and local taxes). The vast majority of this group was poor. They didn't owe individual income taxes because they didn't owe a lot of money to start, and various exemptions, like the earned income.  There are three buckets of factors that can bring taxable income down from $1 million to zero. One is tax tricks. The IRS should crack down more. Two is relying heavily on investments. The administration can try to level taxes for earned income and investment income. Third is great misfortunes. When investments lose significant income, a house or business is destroyed (i.e. a casualty loss), or a family member gets sick and incurs high medical costs for the self-insured, all these things chop away at taxable income and eventually bring a millionaire's income taxes to zero. tax credit, wiped out the rest.  

Mitt Romney’s mother discusses George Romney, his dad, 
being on welfare.

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