The Heritage Foundation in Washington, D.C., has always had a special place in my heart. In the late 1980s, during the presidency of George Herbert Walker Bush, the right-wing think tank provided me with my first job as a young conservative intellectual. My first assignment was to write a policy brief about presidential war powers. I was removed from the project after I wrote a draft that began with the observation that the U.S. Constitution divides war powers between Congress and the president, and gives the most important war powers — the power to declare war and to fund it — to Congress. The higher-ups at Heritage reassigned the paper to a Wall Street Journal staffer, who provided them with what they wanted: a brief arguing that the president has absolute, uncontrollable power in foreign affairs.
One of my next assignments was to write a policy paper justifying a forthcoming bill from the late Sen. Jesse Helms, a belligerent reactionary from North Carolina. When I met with the senator’s staff, I was told to wait because Helms wasn’t sure what he was going to put in the bill. After I failed to turn in the policy brief on time, I received an official reprimand from my supervisor, which I treasured until I lost it during a move. The reprimand said, in effect, that at Heritage we write policy papers first and add the facts later.
Things went downhill. I soon left Heritage and, a few years later, the conservative movement altogether. When several colleagues and I founded the New America Foundation in the late 1990s, I held up Heritage as a model of what a genuine think tank ought not to be.
I am amused to report that my former colleagues at the Heritage Foundation have lost none of their willingness to sacrifice truth to propaganda. The Heritage Foundation has published an “Index of Dependence on Government” by William W. Beach and Patrick Tyrrell that seeks to bolster Mitt Romney’s theme that at least 47 percent of Americans are parasitic, government-dependent “takers” rather than “makers” (hat tip to Thomas B. Edsall):
Today, more people than ever before depend on the federal government for housing, food, income, student aid, or other assistance once considered to be the responsibility of individuals, families, neighborhoods, churches, and other civil society institutions. The United States reached another milestone in 2010: For the first time in history, half the population pays no federal income taxes. It is the conjunction of these two trends — higher spending on dependence-creating programs, and an ever-shrinking number of taxpayers who pay for these programs — that concerns those interested in the fate of the American form of government.
What caught my eye in this latest piece of Heritage agitprop was this sentence: The United States reached a milestone in 2012 -- or the first time in history, half the population pays no federal income taxes.
This is not just wrong. It is an error embarrassing enough to shame even a shameless propaganda mill like the Heritage Foundation.
Heritage implies that a majority of Americans paid federal income taxes throughout American history, presumably back to the 1790s. Nothing could be further from the truth. For much of American history, 100 percent of the population paid no federal income taxes, because there were none. And the federal income tax began to fall on the middle-class masses, not just the upper classes, only in the 1940s.
The first federal income tax in the U.S. was enacted in 1861 to help pay for the Civil War. It was abolished afterward, but re-created in 1894. After the Supreme Court ruled that it was unconstitutional, because it was not “apportioned among the states,” the Constitution was amended by the 16thAmendment to give Congress the power to levy income taxation.
But until World War II a majority of Americans did not pay any federal income tax, either because they made too little money to be required to file returns, or because exemptions like the standard deduction eliminated any federal income tax liability. According to the conservative Tax Foundation, which has a friendlier relationship with facts than does the Heritage Foundation, as recently as 1940 the percentage of those who filed (a group smaller than the working-age population) who owed federal income taxes was 49.4 percent. In that year, Republican presidential candidate Wendell Willkie missed the opportunity to sneer at “the 49 percent.”
It was only during World War II, with the institution of the income tax withholding system, that a majority of Americans became subject to federal income taxation. If it were accurate, the sentence in the Heritage Foundation’s “Index of Dependence on Government” would read: The United States reached a milestone in 2012 -- for the first time since World War II, half the population pays no federal income taxes.
But this in itself undermines the recent right-wing talking point that the country is becoming a nation of moochers living off a dwindling number of heroic Ayn-Randian “job creators.” That is because, until recently, conservative Republicans were leading the campaign to remove low-income Americans from liability for federal income tax.
President Ronald Reagan and his successors have supported an expansion of the Earned Income Tax Credit as an alternative to a higher minimum wage. A “negative income tax” of the kind favored by conservative economist Milton Friedman, the EITC reduces or eliminates federal income tax liability for many of the working poor. If their incomes are too low, the tax credit is “refundable,” which means that the IRS sends them checks.
Another refundable tax credit created with the support of conservatives like Newt Gingrich is the child tax credit. Like the EITC, this tax credit reduces federal income tax liability for millions and is refundable for some.
From all of this it follows that if conservatives like the authors of the Heritage Foundation’s Index of Dependence of Government are sincere in their outrage about the growing number of nonpayers of federal income tax, they should praise President Franklin D. Roosevelt for turning the income tax, originally a tax on the economic elite, into a tax on the majority of Americans. And they should denounce Reagan, Gingrich, the Bushes and others for supporting tax credits that have eliminated millions of low-income Americans from liability for federal income tax payments.
Thus my proposed emendation:
The United States reached a milestone in 2012: For the first time since liberal New Deal Democrats justly extended income tax liability from the rich to the middle and working classes, half the population pays no federal income taxes, thanks to the misguided efforts of conservatives to increase the number of government-dependent nonpayers.
Something tells me that Heritage won’t print this correction.