Urban Exile: A Dispatch From the 47 Percent

by Livia Gershon

This summer, I was chatting with my parents, and I happened to mention that my husband and I pay pretty much no federal income taxes. My dad was shocked. What about withholdings from your paychecks, he asked. I said we get it all back in our refund.

I was kind of embarrassed to admit it. My parents are the types to buy something from every kid who comes to the door selling raffle tickets or candy bars, and they raised me to have the same attitude about taxes. Contributing is just what you do.

When I saw the clip of Romney, I remembered that conversation and thought a little more about my relationship with taxes.  For the first 10 years or so of our working lives, my husband and I paid federal income taxes on our close-to-the-American-median incomes. But when our second child was born three years ago, we suddenly found ourselves among the Wall Street Journal’s “lucky duckies.” One year, when my husband was in a training program on his way to a second career as a teacher, we actually qualified for the earned income tax credit. This year we paid $91 in federal income taxes.

Like the vast majority of the 47 percent, we pay other taxes—local and state property taxes, Social Security and Medicare taxes and so on—but I do feel kind of like I’m avoiding my responsibility to pay for my government. Maybe not all of it. I could do without funding Defense or Homeland Security. But I feel bad for not contributing to VA hospitals, EPA grants for brownfield cleanups and the Title One money that helps pay for my older kid’s school.

As it turns out, the main reason I’m not paying my fair share goes back to George W. Bush, who championed expanded child tax credits in 2001 and 2003. The credits are the sort of policy that’s typical for this country. Instead of paying for services like childcare to improve families’ quality of life directly, U.S. politicians love to craft convoluted tax policy that gestures at the same goals.

A lot of the people who are with me in and on the borders of the 47 percent are here for similar reasons. They fall into enough tax deductions and credits at the moment that they end up with no obligations to the federal budget, or they’ve worked and paid taxes all their lives, and now they’re retired and collecting Social Security. My guess is that many people don’t even know that they’re in this camp, especially if they don’t do their own taxes and don’t bother to compare the deductions on their paychecks to their refund checks.

For many others, though, there’s no question of paying federal income tax because their income is far too low to even support their basic needs.

Take “Sasha,” who lives in a public housing complex near my house. She’s someone Romney might have been thinking about in that room with his million-dollar donors. She doesn’t pay income taxes because she’s been getting disability benefits since being diagnosed with multiple sclerosis, which I suppose Romney would say means she believes the government has a responsibility to care for her.

Before she got sick, Sasha worked for years assembling computer boards. She got caught in a round of layoffs, and after that she never managed to find consistent work.

“Dunkin Donuts here, Dunkin Donuts there,” she said. “But that’s really not a job.”

Then there’s Blackie. He’s worked for years at a big-name department store, getting 32 to 40 hours a week, but a couple of years ago, he was evicted from his apartment, and he couldn’t find another place in the area he could afford. He ended up living at the YMCA and then a temporary housing facility.

“I considered suicide very, very briefly a couple of times,” he said.

If you were a friend of Romney’s, you might wonder why Sasha and Blackie didn’t work harder to find good jobs, or go back to school to become more employable. Here on the planet Earth, of course, we’re well aware that good jobs are a rare and precious commodity, even for college graduates.

What’s interesting is why so many of the jobs that are around aren’t good ones. Dunkin Brands made profits of more than $34 million in 2011, and many of its franchise owners make good money too, so why does working at the ubiquitous New England coffee delivery systems barely count as a job at all?

The answer comes from the economic concept of decoupling, the fact that since the 1970s wages have stagnated while corporate profits have risen dramatically. The obvious answer to the question of why Sasha couldn’t get paid a living wage is that, after her old employer let her go, she didn’t have the skills to get something better than a crappy service-sector job. The even more obvious answer—so obvious that it’s easy to ignore it—is that whoever owned her Dunkin Donuts store decided not to pay her more and, instead, take more of the money she brought in.

A donut shop is a good example of the issue because it’s not selling anything with much inherent value. Coffee and sugar and flour are cheap. Dunkin’ Brands and its franchise owners make the bulk of their money on the value added by people working in warehouses and, mostly, the stores themselves. And the less they pay, the more money they make. With retail, it’s even clearer: Buy from manufacturers, sell at convenient stores. Real estate and labor contribute pretty much everything you can make a profit on.

Like I said, this is pretty obvious, but it’s almost completely ignored when we start talking about who ought to be contributing and who believes they’re entitled to something. And, by the way, Sasha and Blackie don’t sound remotely entitled. Sasha actually uses similar language to Romney’s when she talks about teaching her kids to take care of “their own responsibilities.” Of course, it makes a bit more sense coming from a mother talking about her kids than from a disconnected rich guy talking about his political enemies.

The problem for Sasha and Blackie is not that they’re not giving enough to society. It’s that the companies they work for have been taking too much from them. So if they feel, as I do, that she ought to be contributing to the federal programs that help make our country great, maybe we should all be lobbying for the closing of corporate tax loopholes and an increase to the capital gains tax. That way at least we’ll be indirectly making our contributions.