The 47 percent: a case study

Gleckman profiles a single mom who likely owes no income tax thanks largely to the Earned Income Tax Credit and the Child Tax Credit.

Seth Perlman/AP/File
Tax payers search through tax forms at the Illinois Department of Revenue in Springfield, Ill., in this April 2010 file photo. Low-income workers benefit far less from tax subsidies than middle-income households, and vastly less than high-income households, Gleckman writes.

About that 47 percent: Let me introduce you to Andrea. When I met her a couple of years ago, she was a home health aide who typically worked six days-a-week and often put in 50 hours.

She loved her work, but it is not something most of us would want to do. According to the Labor Dept., aides are more likely to be hurt on the job than coal miners.  Her pay: $8.40-an-hour.

Andrea was 22 and a single mom. Her daughter, Trinity, was 3. Andrea got up before 7 each morning, rode the city bus with Trinity to day care, then took another bus to her job—caring for a patient in his home.  After  a grueling seven-hour day, she’d take a bus to pick up Trinity, then another bus home, where she’d make dinner, help Trinity learn her letters, and work on her own GED.

At $8.40-an-hour, Andrea could earn $420 for a 50-hour week. And if she worked 50 hours, 52 weeks a year, that’s $21,840—well below the income tax threshold for a single mother with one dependent child.

For someone in Andrea’s situation, that’s no accident. I don’t know about her personal tax situation, but a typical head of household like her would owe no income tax thanks largely to the Earned Income Tax Credit and the Child Tax Credit, both subsidies passed by large majorities in Congress and intended to encourage people to work.

Without them, she’d face stiff marginal tax rates for taking a job—a penalty that would punish both her and society at large. In fact, as my former Tax Policy Center colleague Len Burman noted in a TaxVox  post last year, the EITC is the single most effective government program aimed at getting people out of poverty.

Of course, people like Andrea still pay taxes. For 2012, someone making $21,840 would pay about $2,900 in Social Security and Medicare payroll taxes (including her employer’s share). Next year, if the payroll tax holiday expires as scheduled, her payroll tax would rise to roughly $3,300. She’d also likely pay other levies, including state and local taxes.

On net, someone in her situation would indeed be a federal taxpayer, though barely. In 2012, she’d receive a $2,856 income tax payment, not quite enough to offset $2,900 in payroll taxes. If the temporary payroll tax cut expires, she’d owe about $450 in net federal taxes.

Keep in mind that 60 percent of recipients claim the EITC for only a year or two, and only about 20 percent take it for five years or more. With better skills and more experience, many eventually earn enough that they no longer qualify. And, that it seems, is the point.

After spending a few days with Andrea, I’m pretty sure Mitt Romney got it wrong in his videotaped talk to a group of contributors. To Romney, people like Andrea “believe that they are victims, …believe the government has a responsibility to care for them….” He added, “I’ll never convince them they should take personal responsibility and care for their lives.” But Andrea in no way thinks she is a victim and is already taking responsibility for her life.  She does not need a politician to encourage her.  She has Trinity.

Romney went off the tracks by confusing the EITC and CTC with a sense of victimization and entitlement. People who benefit from these subsidies are exactly the opposite of that stereotype. Many want desperately to work, and struggle more than many of us can imagine to achieve the American Dream. For people like Andrea, those subsidies are the difference between keeping their heads above water and drowning.

Romney, like many who focus on the 47 percent, is also blinded by the deceptively simple binary status of taxpayer/no taxpayer. In truth, low-income workers benefit far less from tax subsidies than middle-income households, and vastly less than high-income households.

Let’s just take two examples: According to TPC, a household making between $20,000 and $30,000-a-year got an average EITC benefit of $866 in 2011. By contrast, those making more than $1 million got an average tax cut of $7,000+ thanks to the deductions for mortgage interest and property taxes alone.  The EITC may have moved a household from federal income taxpayer to non-taxpayer. But who was really better off?

You've read  of  free articles. Subscribe to continue.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.