There is a certain plausibility to the claim that the more people fall off the income-tax rolls, the more will support federal activism. But there is a series of evidentiary hurdles that this claim cannot begin to overcome. There is no evidence that changes in the percentage of people who pay income tax has had any effect on public opinion, let alone a large one. The U.S. that began the Democrats’ 40-year reign in the House of Representatives in 1954 had roughly the same percentage of non-payers of income tax (24.9) as the U.S. that ended it in 1994 (24.4). A relatively large proportion of the citizenry paid income taxes in the early 1960s. It didn’t stop the Great Society from being enacted. The number of people who pay no income taxes moved up fast between 2006 and 2010, which has helped set off conservative alarms. But voters turned sharply right between the elections of those two years.
The Tax Foundation has calculated the percentage of filers in each state who pay income tax. The ten states with the highest number of non-payers are a strongly Republican bunch: Eight of them went for John McCain in 2008, and nine of them have Republican governors. Keith Hennessey, an economic adviser in George W. Bush’s administration, notes that the historical data suggest that the child credit was the main reason for the increase in the number of non-payers between 1995 and 2007. If the conservative story about falling income-tax rolls is true, then, we should expect to see middle-income parents moving left, compared with the general electorate, during that period. There is no evidence that anything of the sort has happened.
The story also relies on implausible psychological assumptions. It assumes that people who pay payroll taxes but not income taxes make a sharp distinction between the two. But what if they, or many of them, simply think that they have paid taxes? It assumes, further, that immediate circumstances matter more than long-term ones. When conservatives argue for tax cuts for high-income voters, or against tax increases for them, we often point out that some people who are “rich” today will not be in ten years, and vice versa. We argue, further, that high taxes reduce the incentive to work, save, and invest, which presupposes that people can anticipate the taxes they will pay if they gain income. But if they can anticipate future taxes, then the fact that they do not happen to pay income taxes at the moment should not matter.
That point has special relevance for parents who are paying no taxes because of the child tax credit. That credit will not be available to them when their children have become adults. Parents are almost by definition more oriented to the long term, on average, than other voters. They ought to be able to see that their taxes are going to go up when their children grow up, and that if they vote for big government now they will have to pay the bill later.
In one respect, the fixation on the number of people paying income tax is absurdly optimistic. Conservatives who worry about the political implications of this number are assuming that people who pay no income tax will conclude that expansions of government serve their material interests and vote accordingly. But if that’s the case, then surely anyone who pays some income taxes, but gets more in benefits from the federal government, should reach the same conclusion. The real “takers” coalition would then include anyone who is a net beneficiary of the federal government. Under those circumstances merely requiring everyone to pay some amount in income taxes would change nothing. Any welfare state will have a large number of net beneficiaries. In a welfare state that runs routine, large deficits, almost everyone may be among them.
It is entirely plausible that receiving benefits from the government biases some beneficiaries against needed reforms, and that the problem grows more acute the more beneficiaries there are. Surely this is the real cause for concern: Conservatives cannot really believe that it was a flaw in America’s founding that nobody paid income taxes to the federal government for almost all of the country’s history before the welfare state.
But conservatives should seek to remedy the problem by cutting benefits rather than by raising taxes in the hope it will make people more eager to cut benefits. To seek to raise taxes on poor and middle-class people would be a terrible mistake. The idea is bound to be unpopular. And it would alter the character of conservatism for the worse. A desire to cut taxes for people at all income levels, and to oppose tax increases at all income levels, was key to associating conservatism with the diffusion of opportunity in the Reagan years and after. Changed circumstances may demand a different approach than that of three decades ago. They do not compel conservatism to become a creed openly focused on helping one group at the expense of another, a kind of mirror image of egalitarian liberalism.
There are many things to worry about in this world. The number of people paying income tax isn’t one of them.
— Ramesh Ponnuru is a senior editor of NR. This article originally appeared in the Nov. 28, 2011 issue of National Review.