Mitt Romney is still dealing with the fallout from that now infamous fundraiser in May in which he tried out his best Thurston Howell imitation in front of a crowd of rich people. He’s been clobbered for his performance by Democrats and late-night talk-show hosts, of course. Conservatives, however, seem split about the remarks. Some are not only rallying around Romney in his time of need but also defending the statements. “Romney sounded remarkably like … a real conservative,” wrote Michael Walsh of National Review. “He ought to own it.” On Fox News, Bill O’Reilly agreed: “If I’m Governor Romney, I run with this all day long.”
But others have harshly criticized Romney, and not just because it’s politically unwise to seemingly write off half the electorate. In fact, numerous conservatives have been arguing that Romney’s remarks implicitly reject one of the fundamental tenets of the conservative agenda: that carefully targeted tax breaks and deductions can work economic and social miracles, a favorite claim of Republicans from Ronald Reagan to George W. Bush.
In the Washington Post, for example, Henry Olsen of the American Enterprise Institute charges Romney with “severely misstat[ing] and undermin[ing] conservative principles” and insulting Reagan’s legacy.
He’s got a point. One of the main reasons so many Americans don’t pay income tax is the existence of tax breaks and deductions that Republicans have long supported.
Let’s break it down. Roughly half of those who don’t pay income tax are simply poor. Of the rest, Roberton Williams of the Tax Policy Center explains:
Three-fourths of those households pay no income tax because of provisions that benefit senior citizens and low-income working families with children. Those provisions include the exclusion of some Social Security benefits from taxable income, the tax credit and extra standard deduction for the elderly, and the child, earned income, and childcare tax credits that primarily help low-income workers with children.
These deductions weren’t just acts of political expedience. They reflect a profound difference in ideology between (most) Republicans and (most) Democrats. Democrats tend to prefer to help people in financially tough situations through government programs; Republicans generally prefer to help those same people through the tax code.
Take the Earned Income Tax Credit (EITC), a longtime Republican favorite, which offers a tax credit to low- and moderate-income Americans who are employed or self-employed and meet certain other requirements. If the credit is bigger than their tax bill, they end up getting a tax refund despite having paid nothing. While this might sound a bit like welfare, Republicans embraced the idea of the EITC because they saw it “as an anti-poverty tool that emphasizes the importance of labor force participation,” as Reihan Salam notes on his National Review blog:
The idea … is that subsidies aimed at increasing labor force participation and other work supports are preferable to a negative income tax or unconditional cash assistance because they encourage people to get on the first rungs of the jobs ladder, and to become less dependent over time.
In other words, the idea behind the EITC is to transform “takers” into “makers” by allowing them to pay little or no income tax, at least temporarily.
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And these people, Olsen of the American Enterprise Institute argues, are precisely those whom Romney should be courting most assiduously. Indeed, he suggests, Romney’s remarks were an insult to the “forgotten American,” Reagan’s term for the hardworking (if not necessarily well paid) everyman who bleeds red, white and blue. “[I]n Reagan’s view,” Olsen writes,
ordinary people were capable of greatness … But when Romney divides the world into makers and takers and presumes that our ability to pay federal income tax is a measure of which group we belong to, he sends a different message. He implicitly tells average Americans that their quiet work doesn’t “make” America unless they are entrepreneurs who make enough money. Worse, he tells them that their lives aren’t even dignified, that they are “takers” who are unable to exercise personal responsibility over their lives.
It seems likely that Romney will be explaining his remarks for a long time to come.