Senator Rick Scott's plan to raise taxes on low income Americans
Have you ever heard the expression, “This is like shooting fish in a barrel”? This means that whatever you are trying to accomplish is VERY EASY. Today I focus on the very easy task of tearing apart one of Senator Rick Scott’s most ridiculous recommendations buried in point 5 of his so-called 11-point plan to “Rescue America.”
[There is a 31-page power point of his plan which can be accessed here. To read it, one has to click on the TV screen and the entire sent of pdf pages will show up.]
Point five is summarized: “We will grow America’s economy, starve Washington’s economy, and stop Socialism. Socialism is un-American and always leads to poverty and oppression. We will stop it. We will shrink the federal government, reduce the government work force by 25% in 5 years, sell government buildings and assets, and get rid of the old slow, closed, top-down, government-run-everything system we have today.”
[Notice that aside from the reduction in the government work force by 25% over five years, everything else is meaningless blow-hard rhetoric. What does it mean to “stop socialism”? By how much will “we” shrink the federal government? Will ALL government buildings and assets be sold?]
Buried in the details (on page 17 of the 31 page pdf) are a few words, I bet Scott wishes he had never approved (I doubt he wrote this plan, and it is of course possible he never read the following words): “All Americans should pay some income tax to have skin in the game, if only a small amount. Currently over half of Americans pay no income tax.”
For Democrats worried about losing control of both houses of Congress in November, this was a godsend. They immediately began to note that Scott was proposing to RAISE TAXES on that “over half of Americans.” It’s pretty straightforward. Scott writes “….half of Americans pay no income tax” right after proposing that “All Americans should pay some income tax….” I apologize for being a pedant but if “all” Americans should pay some income tax but now “half of Americans” currently pay no income tax, then the “half” that currently pay no income tax will see their income taxes rise ---- from ZERO to some positive number.
[See for example: https://www.businessinsider.com/rick-scott-rescue-america-plan-raise-taxes-fundraising-democrats-midterm-2022-2 or https://www.yahoo.com/entertainment/democrats-seize-gop-senator-rick-222034897.html]
Perhaps reading those words for the first time, Scott recoiled. No, he asserted --- he was NOT proposing to raises taxes on half of all Americans. Anyone who wants can see him attempting to deny what he actually wrote can check out his appearance on the Sean Hannity show.
Let’s turn to FACTCHECK.org for a description of all this: See “Rick Scott Proposed ‘All Americans’ Should Pay Income Tax, Then Denied That He Did,” D’Angelo Gore, February 24, 2022. [Available here.]
Here is an extended quote from their report:
“In a statement to FactCheck.org, a spokesman for Scott said the senator actually wants to focus on only a subset of U.S. residents who don’t pay federal income taxes nor payroll taxes for Social Security and Medicare.
“Senator Scott believes that everyone should pay their fair share, and everyone should have skin in the game,” said Chris Hartline, communications director for the National Republican Senatorial Committee which Scott heads. “There are too many people who are benefiting from government services without contributing to the system. That obviously would not include retirees who have paid plenty in taxes or working Americans who are paying into the system through either income tax or payroll tax. He believes there are too many able-bodied Americans who are choosing not to work, partly due to policies from Joe Biden and the Democrats, that have expanded the welfare state and paid people more to not work than to work. That should change.”
But nowhere in Scott’s plan does it say he was referring to only able-bodied, nonretirees who receive government benefits but don’t work and don’t pay federal income taxes or payroll taxes. That very specific description does not apply to “[o]ver half of Americans” — the language used in Scott’s plan.
TPC [the Tax Policy Center] estimated that 19.3% — or 34.4 million — of all tax units would owe neither federal income nor payroll taxes in 2021. That was down from an estimated 20.5%, or 36 million tax units, who did not have to pay either tax in 2020 — but up from 16.8%, or 29.2 million tax units, who were exempt from those taxes in 2019.
Even those estimates include more people, such as elderly and disabled Americans, than the narrow group that Scott’s spokesman now claims he wants to target.”
So clearly, the clean-up by Scott won’t fly. The statement from his flack directly contradicts what Scott himself wrote (IF he wrote it!). His proposal complains about people who don’t pay income tax. It didn’t say anything about Payroll Taxes. Almost all non-retired Americans who do not pay income taxes, pay payroll taxes into the Social Security, Medicare and Unemployment Insurance trust funds. Very few non-retired Americans owe neither payroll nor income taxes.
It is clear what Scott has tried to do. He has decided that the best way to get the votes of workers and retirees is to demonize the poor as “takers.” (and to wildly exaggerate their numbers). This is what Mitt Romney was doing in his recorded remarks during the 2012 Presidential election when he told a well-heeled group of donors that “47 percent” of the population pay no income taxes and thus are not interested in listening to his argument that taxes are too high.
Here is a direct quote from the surreptitiously recorded speech to those rich donors:
"There are 47 percent of the people who will vote for the president [Obama] 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. "And I mean the president starts out with 48, 49 percent … he starts off with a huge number," Romney continued. "These are people who pay no income tax. Forty-seven percent of Americans pay no income tax. So our message of low taxes doesn’t connect. So he’ll be out there talking about tax cuts for the rich. I mean, that’s what they sell every four years. And so my job is not to worry about those people. I’ll never convince them that they should take personal responsibility and care for their lives." [available here]
The whole point of this set of arguments --- and it goes all the way back to Ronald Reagan in the 1980s with his stereotype of the “welfare queen” -- is to convince anyone currently working or retired that they are supporting a nebulous and very large (and usually non-white, non-male) “THEM”! Public opinion polls routinely find that the percentage of the population “taking” from the government is wildly exaggerated --- and to make it even worse, some of the people who receive government benefits like Medicare and Social Security don’t believe that this is a government transfer payment but that it’s “their” money. (Actually, both Social Security and Medicare are mostly pay-as-you-go which means the current working generations finance the expenditures for the currently retired generations --- that’s what the whole concept of “social insurance” is all about.).
In the right-wing propaganda playbook, black women on welfare (even though the majority of welfare recipients are white and many of them are, of course, children) are “taking” from upstanding (white) workers who pay taxes. This disgusting act of political trickery has been in the right-wing playbook for decades. Back in 1996 it did succeed in passing a law abolishing the old AFDC program (which is what the right-wing mostly meant when they attacked “welfare.”). Despite that success in reducing the “welfare” population, the right wingers have not abandoned that playbook.
However, once AFDC was abolished, these right-wing ideologues had a problem. So many workers end up being retired and living off of social security -- and therefore paying no income tax -- it is difficult to drive a wedge between those who pay income taxes and those who only pay payroll taxes. And remember, Scott’s apologist explicitly claimed retirees were not on Scott’s “hit list!”
Scott’s playbook reminds me of the effort by former President Bush in 2005 to partially privatize social security. They tried to drive a wedge as well--- only this one was between workers and retirees. That approach involved saying that Social Security pensions were so generous the system would go bankrupt and not be available for the current generation of younger workers. That ploy didn’t work and I am pretty damn confident that Scott’s effort to demonize “others” as “takers” won’t work either.
[By the way, much of the details of Scott’s point 5 about the economy involve promises to figure out ways to force the federal government to spend less money and to move many things government does to the private sector. One point requires at least some mention – the promise to balance the federal budget. Scott asserts that States do it. True, but states are permitted to have “capital” budgets where all long-term spending on infrastructure (roads, bridges, schools, hospitals, rail transport, airports, even baseball or football stadiums) can be financed by issuing bonds. If the federal government were permitted to have a “capital” budget, much of what shows up as a budget deficit would be folded into long term federal investments. Balancing the current spending budget would be very easy if most of the defense budget were counted as an “investment.” Absent a capital budget, a balanced federal budget would be a disaster.
It is also true that requiring a balanced federal budget every year would probably produce a recession if not a depression. Every time there is a slowdown in economic activity, the federal budget automatically moves into a deeper deficit or sees its surplus shrink. That is because of automatic stabilizers which cause tax revenues to decline and payments such as unemployment compensation to rise. If the federal budget has to be in balance, then whenever the economy slows down, the federal budget will have to be cut or taxes will have to go up, slowing the economy further. Instead of helping cushion the ups and downs of the business cycle, the federal government would make things worse if it had to balance its budget every year. For a good explanation of how stupid is the demonization of the federal budget deficit see William Vickrey, “Fifteen Fatal Fallacies of Financial Fundamentalism, A Disquisition on Demand Side Economics,” October 5, 1996 available on the Columbia University Department of Economics Website.]
In future commentaries, I’ll dissect others of Scott’s ridiculous set of proposals ---proposals that Senate Majority Leader Mitch McConnell has mostly repudiated. I wouldn’t be surprised if pretty soon, Scott tries to let this set of proposals fade into obscurity. Hopefully, the media and the Democrats will remind voters exactly what they can expect if the Republicans take over Congress in 2023 and the White House in 2025.]
[Friday, April 1, the day this commentary was broadcast, the New York Times ran a story about Senator Scott's effort to deny the undeniable --- that he did propose raising taxes on the half of Americans who do not pay income tax. The article even made the same comparison I did to Romney's gaffe back in 2012. See Jonathan Weisman, "A Florida Senator Is Proposing Income Taxes for All, and That's a Problem" April 1, 2022, Page A21.]
Michael Meeropol is professor emeritus of Economics at Western New England University. He is the author with Howard and Paul Sherman of the recently published second edition of Principles of Macroeconomics: Activist vs. Austerity Policies
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