Now that we’ve all had time to calm down and step back a bit from Mitt Romney’s now infamous gaffe about the “47 percent,” its worth taking a closer look at what Romney actually said and the larger point that he was trying to make.
Romney, of course, was factually wrong in implying that the 47 percent of Americans who do not pay federal income taxes are some sort of poor underclass. He was perhaps more fundamentally wrong in implying that the poor, whether they pay taxes or not, see themselves as victims and are content to be dependent on government. And, it was just plain silly to say that non–federal taxpayers will uniformly vote for Obama.
While it is true that nine out of ten non-payers have incomes below $50,000 per year, the 47 percent includes both working poor and middle-class taxpayers with substantial deductions, and large numbers of retirees, who have paid federal taxes in the past, as well as students, who will do so in the future. Moreover, there is no evidence that most poor people wish to remain permanently dependent on government. Indeed, every survey of those on welfare, for instance, indicates that they would prefer to be working, and aspire to a better life for their children. And, some of the non-paying groups — seniors for example — are disproportionately likely to vote for Romney.
All in all, Romney’s statement was a model of inaccuracy combined with political tone-deafness.
On the other hand, its not all that clear that President Obama sees things in a much different way. In 1998, as part of his “I favor redistribution” video, the president spoke of recipients of government benefits as a potential “majority coalition.” Today, his plan is basically “I will maintain or even expand what you get from government, but you won’t have to pay for it, just a few rich people will.” A president who cannot open his mouth without demonizing “the rich” who “don’t pay their fair share” can hardly pose as an opponent of classifying Americans.
More important, however, the contretemps obscured several important points that really should be discussed. First, both common sense and academic research suggest that it is easier to increase federal spending if fewer people have to pay for it. “Skin in the game” matters. For example, a study from the non-partisan Tax Foundation found that “A one percentage point increase in the share of tax filers who are non-payers is associated with a $10.6 billion per year increase in transfer payments.” Given that the percentage of non-payers has increased by 20 percentage points since 1990 to 47 percent today, the Tax Foundation concludes that this increase is at least partially responsible for $213 billion annually in additional spending.
It’s not just those who pay no taxes that may be inclined to support bigger government. According to a study by Greg Mankiw based on data from the Office of Management and Budget, roughly 60 percent of Americans receive more in government benefits than they pay in federal taxes. A Tax Foundation study suggests that, taking into account President Obama’s 2012 policies, as many as 70 percent of Americans are net recipients of government largesse.