The political news this week has been dominated by a secret film of Mitt Romney speaking in May at a fundraising event in Florida. In it, Romney, speaking "off the cuff," described a bloc of Americans that support President Obama:
There are 47 percent of the people who will vote for the president no matter what. All right, there are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it. That that's an entitlement. And the government should give it to them. And they will vote for this president no matter what.
The remarks have generated a heated discussion about "the 47%" - who they are, how they vote, and the role of the government. We thought we should check in with Peter Wenz, author of Take Back the Center, a new book arguing for the return of a progressive tax code. Not surprisingly, he saw little of value in Romney's remarks:
If Mitt Romney had read Take Back the Center he’d have known better than to suppose that the 47 percent of Americans who don’t pay any federal income tax are loafers looking for government handouts. In the first place, they pay other taxes and therefore support the government. If they have a job, they pay into the Social Security and Medicare funds. If they’re unemployed they still pay sales taxes and property taxes (either directly to the government or indirectly to their landlords).
Most of the 47 percent depend on Social Security after a lifetime of work, or are employed at jobs that pay less than a living wage. Workers who clean motel rooms, wait on tables at Denny’s, cashier at grocery stores, or greet customers at Walmart typically pay no income tax if they have dependents. Walmart actually instructs its new workers on how to apply for such government benefits as subsidized housing, free school lunches for their kids, and food assistance for their home. Walmart knows that it doesn’t pay a living wage. The family of its founder, by contrast, the Walton family, has assets of $69 billion, which just about equals the assets of the entire bottom 30 percent of the U.S. population.
Romney seems to imagine that rich people who pay a significant amount of income tax are supporting the government by dint of their own hard work. He neglects to notice how handsomely the government is supporting them. All of the beneficiaries of businesses that pay less than a living wage are being supplied workers by government subsidy. Without housing and food assistance, poor people would be too busy trying to stay warm, feed themselves, and keep out the rain to show up to make beds at motels, wait on tables, or greet customers at Walmart.
More directly, the government supports whole industries with tax dollars. Most basic research is done by the government and then turned over to private enterprise at little cost. So anyone making money from computers, cell phones, and the Internet, all resulting from government research, is a beneficiary of government favor. Basic medical research is done for the most part by government-supported institutions, which is an enormous subsidy of the pharmaceutical industry. An additional subsidy is the provision of Medicare Part D that disallows the government from bargaining for lower drug prices. The constraint on bargaining costs taxpayers about $50 billion a year.
Mining companies pay below-market rates for extractions from government-owned land, and ranchers and farmers in the west pay below-market rates for the water they need. General tax revenues pay for most of the roadways and road repairs in the United States, not the tax on gasoline, so the automotive industry which paid for Romney’s affluent youth is a major beneficiary of government favor. The nuclear industry exists only through government subsidies and loan guarantees. Our economy’s financial sector, which garners 40 percent of corporate profits, would have imploded but for massive government bailouts.
In short, most of the 47 percent who pay no income tax are hard-working Americans or people dependent on Social Security after a lifetime of hard work. The very rich, by contrast, benefit from government favors out of all proportion to their economic and social contributions.