Democrats and most of the news media spent the 2017 fight over President Donald Trump’s tax cut peddling the outright lie that the bill would hike taxes on most working-class and middle-class people. But apparently, this appealed to some Republicans, who have decided that they should actually hike taxes on working-class people.
Their argument can be summed up with the words of the plan laid out by National Republican Senatorial Committee Chairman and Florida U.S. Sen. Rick Scott: “All Americans should pay income tax to have skin in the game, even if a small amount.”
As Josh Barro
puts
it, “A promise to make all Americans pay federal income tax is a promise to raise taxes on well over one hundred million people.”
You may ask, Who are these millions of people not paying income taxes? They aren’t necessarily the unemployed, and they’re not tax dodgers. Many of them are just parents who work and make modest to average wages.
Under the current tax code — you know, the one shaped by Trump’s tax reform bill — a family of five with parents making a combined $100,000 might not owe any federal income tax. Imagine that Mom has employer-sponsored family health insurance, an effective pre-tax deduction of about $6,000 per year. They max out their health savings account, putting in $7,300 a year. They both drive into work and have $180 each deducted for parking. They each have a 401 (k) that matches their first 3% of salary, so they maximize that match, taking $3,000 off their taxable income.
This couple doesn’t own an expensive home and doesn’t live in a high-tax state, so they don’t itemize their deductions — they instead take the standard deduction of $25,900. That leaves a taxable income of about $53,300, and thus a tax of $5,641. But then, their children earn them a Child Tax Credit of $6,000, which reduces their federal income tax bill to zero.
These people aren’t slackers. Maybe you don’t like all of these deductions and credits, but they all have bipartisan support.
And although these people are paying zero federal income taxes, that doesn’t mean they pay zero taxes. They will pay $5,100 a year in social security taxes, plus $1,200 in Medicare taxes. They might owe state income tax, and if living in an average home, they pay $2,500 in property taxes. A family of five, I would guess, pays an average of at least $3,000 in state sales taxes and perhaps $300 for the federal gas tax.
That’s $12,000 in taxes, with most of it going to the federal government. And Rick Scott is going to say they have no skin in the game?
