Mitt Romney of course made a splash with his dismissive remark about the 47%. These would be the people who pay no income taxes but nonetheless receive government services. With the Congressional Budget Office reporting that Obamacare will give people the opportunity to work less or not at all, the 47% in the labor force will actually shrink in number. Conservatives rightly show concern that removing low-paid workers from the economy is a bad thing, since they are the backbone of the success generated by business owners and enterprises, and since by their labor they achieve a higher level of personal dignity.
But rather than dismiss the 47%, we should celebrate them. But before we do we should describe better who they are. They are, of course, retired people living on Social Security who don’t have other large enough streams of income to push them into a tax bracket. That’s two-fifths of the 47% and not the issue for this discussion. Another two-fifths are the low-wage workers we need to encourage and celebrate. When we file our income taxes, we get a personal exemption of $3950 each and a standard deduction of $12,400 for a married couple. For a family of four, the income tax threshold is $28,200 (the $12,400 deduction and the $3950 exemption for each of four individuals in the family). Everyone who files taxes gets to lop off the first $28,200 they earn (that is, if they’re a family with two spouses and two children). Those who earn less than that pay no taxes. This group comprises another two-fifths of the 47%. With a minimum wage at $7.50 an hour, two spouses working full time would just cross the threshold into income tax territory at a combined income of about $30,000. This is why pushing back against a rise in the minimum wage is so important, since this is where the labor pool comes from which keeps America prosperous. The other fifth of the 47% don’t pay taxes for a variety of reasons. Some are even millionaires who by some quirk of the tax code avoid taxes altogether.
One thing that would help this country out is if we could actually grow the 47%. Why would this be so? As conservatives we understand that it’s a competitive world and that the only way to stay prosperous in the global economy is to let the free market reign. One area where we need to hold the line is on the minimum wage. Again the Congressional Budget Office weighed in on the matter and showed that raising the minimum wage would lead to job loss and even fewer members of the 47%. By letting wages settle to their natural level we provide the opportunity to compete globally on price, and maintain American prosperity. As a smarter man than me once quipped, the purpose of government is to maintain a permanent underclass in order to keep wages low so that the job creators could keep a larger portion of their revenues as profit and make it worthwhile to invest in the economy.
How do we grow the 47%? By continuing to fight for the policies which have been the hallmark of the modern Republican party, especially in the age of Obama. We work to repeal Obamacare, or at least do what is possible to minimize the number of individuals who enroll, since this will leave a larger number of people in the labor pool and decrease incentives to quit work. We hold the line on the minimum wage. This will have the double benefit of keeping a larger number of workers in the labor pool and keep their wages at levels to ensure American competitiveness. And we can work for other policies which counteract disincentives to work. Making progress on implementing parts of the Paul Ryan budget which remove provisions which make it easier for individuals to avoid work is one. Marco Rubio’s Flex Plan to overhaul spending on the poor would be another.
If instead of demonizing the 47% we celebrated them, grew their numbers, and recognized the tremendous contribution they make to America’s prosperity, that prosperity can continue to grow.