It might be the best-known statistic in tax policy: 47 percent of federal tax filing households pay no net federal income tax. After the Tax Policy Center released this estimate back in 2009, it made headlines for years and even cast a shadow over the 2012 presidential campaign. Tax policy aficionados have been bemused by the popularity of this factoid, and frustrated by its frequent misinterpretation. Data about the tax distribution rarely go viral, after all. What was different this time?
A fascinating new book, Racial Taxation, by law professor Camille Walsh, helps explain why this particular piece of data resonates so strongly, especially with conservatives. As Walsh demonstrates, while every person who ever engages with the market economy pays some kind of tax at some point in their lives, the term “taxpayer” has often been used in the United States as an exclusive term that defines who deserves access to public goods. The 47 percent statistic found fame as ammunition in a fight over who “counts” as an American, a battle that has raged for centuries.
Walsh traces the court cases addressing school segregation, starting in the years after the Civil War and continuing through the 1970s. Perhaps surprisingly, this legal contest often was framed in terms of taxes – specifically, who paid property taxes that funded public schools. Walsh documents how African Americans used evidence of their taxpaying to argue for access to tax-funded schools, while segregationists claimed the “taxpayer” label for themselves and argued that residents of color should be excluded from white-only public schools.
As Walsh told me in an email:
[Segregationists’] arguments rested on the idea that, as whites, they presumptively “paid more” in taxes. They made this claim despite the evidence that, especially in majority-black counties in the deep South – where old-style de jure segregation lingered the longest – black families were often doubly taxed for schools.
For instance, in Covington County, Mississippi, much of the property owned by African Americans was in two overlapping districts and taxed twice, once to support the white school district and again for the African American school district. But, thanks to careful gerrymandering of district borders, literally no white-owned property was taxed in support of the African American schools.
In addition to ignoring unfairly high property taxes applied to African American neighborhoods, segregationists made their case by discounting the indirect tax payments of poorer people. Walsh reports the testimony of the tax commissioner for Prince Edward County, Virginia, who insisted that African Americans paid “such a small percentage” of taxes that integrating the schools would cause “chaos.” A lawyer for the NAACP responded that the commissioner’s calculations did not take account of all “indirect taxes paid by blacks” shopping at white-owned businesses.
The invisibility of indirect taxes echoes into the present day. The contemporary misconception that “half of Americans do not pay taxes” ignores sales, payroll, property, and excise taxes (such as motor fuels taxes), and focuses instead exclusively on the federal income tax.
Which brings us back to that 47 percent zombie statistic. As Mitt Romney put it in his 2012 presidential campaign, the 47 percent who “pay no income tax,” are those “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.” His comments, with echoes of President Reagan’s ‘welfare queen’ rhetoric three decades earlier, provoked substantial criticism. Romney later admitted the remarks “did real damage” to his campaign.
But the narrative lives on. “The rhetorical connection between the amount and type of tax payments,” Walsh concludes, “and the degree of citizenship and rights has never been more openly embraced.” What made a relatively anodyne fact about the federal income tax so appealing was that it could be misconstrued as an estimate of the “undeserving” population. Variations on the 47 percent statistic remain “a conservative standard.”
My own research on contemporary attitudes about taxpaying largely comports with Walsh’s historical study. Americans are proud to pay taxes, but angry at the thought that others are not paying their fair share. Unfortunately, Americans hold wrong assumptions about who pays taxes, often colored by racial and ethnic stereotypes about who works hard and who counts as an American.
Nonetheless, I see Americans’ civic commitment to taxpaying in a relatively positive light. Taxes are, after all, the portion of people’s earnings that is supposed to be dedicated to the public good and allocated according to democratic principles. That so many Americans continue to see this act as a civic duty is, I think, encouraging.
But Walsh sounds an important note of caution. “We are not the sum of our federal income tax liability for a particular year,” she told me. “Our responsibilities and rights in relation to each other are much deeper and broader than a single individual claim to ‘taxpayer’ identity can encompass.” Her book suggests that, historically, it has been all too easy to discount the taxpaying of those we wish to exclude from public life.
