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Rick Scott’s tax plan is dumb, immoral, and bad for Republicans

Timothy Carney Timothy Carney, Senior Fellow, American Enterprise Institute
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Florida Sen. Rick Scott’s (R) 11-point tax plan has made him an easy target for a White House looking to turn the nation’s attention away from record-high inflation. Experts have said Scott’s proposal would raise taxes for the lowest-earning Americans, which led President Biden to call Scott’s idea “extreme.”

Scott’s plan has also put him at odds with his own party. Senate Minority Leader Mitch McConnell (R-KY) publicly stated if the GOP regains control of Congress, he would not implement any part of Scott’s plan. McConnell and other Republicans have good reason to oppose Scott’s plan, according to AEI’s Tim Carney. He calls the tax restructure “dumb, economically harmful and morally bankrupt.”

Here’s the argument from Senator Rick Scott:

“All Americans should pay some income tax to have skin in the game, even if a small amount. Currently over half of Americans pay no income tax.”

Scott’s idea is to reverse some of the tax cuts President Trump gave to working men and women and then go further in hiking taxes on low-income Americans.

First, Scott wrongly implies that half of Americans aren’t working.

The people who pay no federal income tax aren’t mostly dilletentes sitting on the couch. They are largely parents who benefit from family-friendly tax breaks passed by Republicans.

The average family of five in Florida, for instance, earns $93,000. If that couple takes the standard deduction [Taxable Income: $93,000- $25,900=$67,100] and their employer-provided health insurance premiums cost $6,000 [Income: $61,100], plus they max out their health savings account with a $7,300 contribution [Income: $53,800], plus they put 3% in their 401k, [Income: $51,010] that leaves them with taxable income of about $51,000. They would owe $5,725 in federal income taxes, but with three kids, they get a $6,000 tax credit, which brings their federal income taxes down to zero.

These aren’t slackers. These are beneficiaries of a tax code that respects families and encourages savings.

Second, Scott wrongly suggests that these folks are avoiding taxes. In reality, they might be paying more $10,000 in taxes to state and federal government, just not in income taxes.

 Everyone who earns even a single dollar pays payroll taxes—the taxes that fund Social Security and Medicare. If you buy gasoline, you pay state and federal gas taxes. If you buy almost anything, you’re paying sales tax. If you own your home, you’re paying property taxes.

When you think of Republicans, you don’t typically think of tax hikes. But these days, there’s one specific tax hike some Republicans are touting: a tax hike on half of all Americans—specifically the half with the lowest incomes.

 It’s politically dumb, fiscally pointless, economically harmful, and morally bankrupt.

 So what are these tax-hiking Republicans thinking? Here’s the argument from Senator Rick Scott:

 “All Americans should pay some income tax to have skin in the game, even if a small amount. Currently over half of Americans pay no income tax.”

 Scott’s idea is to reverse some of the tax cuts President Trump gave to working men and women, and then go further in hiking taxes on low-income Americans.

 There are so many mistakes here, but let’s focus on the four biggest:

 First, Scott wrongly implies that half of Americans aren’t working.

 The people who pay no federal income tax aren’t mostly dilletentes sitting on the couch. They are largely parents who benefit from family-friendly tax breaks passed by Republicans.

 The average family of five in Florida, for instance, earns $93,000. If that couple takes the standard deduction [Taxable Income: $93,000- $25,900=$67,100] and their employer-provided health insurance premiums cost $6,000 [Income: $61,100], plus they max out their health-savings account with a $7,300 contribution [Income: $53,800], plus they put 3% in their 401k, [Income: $51,010] that leaves them with taxable income of about $51,000. They would owe $5,725 in federal income taxes, but with three kids, they get a $6,000 tax credit, which brings their federal income taxes down to zero.

 These aren’t slackers. These are beneficiaries of a tax code that respects families and encourages savings.

 Second, Scott wrongly suggests that these folks are avoiding taxes. In reality, they might be paying more $10,000 in taxes to state and federal government, just not in income taxes. 

Everyone who earns even a single dollar is pays payroll taxes—the taxes that fund Social Security and Medicare. If you buy gasoline, you pay state and federal gas taxes. If you buy almost anything, you’re paying sales tax. If you own your home, you’re paying property taxes.

It would be easy for that median Florida family of five to pay more than $10,000 in taxes, with most of it going to the federal government—but because none of it would be federal income tax, we’re supposed to think these folks are tax dodgers?

The third problem with Scott’s plan is the politics: Republicans simply shouldn’t raise taxes or talk about raising taxes. They especially shouldn’t push a tax hike on the working class. The best thing Donald Trump did was make the GOP more of a working-class party. Scott’s plan would demolish the gains that Trump has made in that regard.

 Scott has a political angle himself. He thinks that too many Americans support bigger government because they don’t pay for it. He believes that if poor and working-class people had “skin in the game” they would see the importance of smaller government.

 There is no evidence for that theory. Republicans have been knocking working-class families off the income tax rolls since the Bush Era, and if anything, those working-class parents have become more Republican.

 The opposite of Scott’s story is more likely: People who can better afford to care for their family—because they are paying less in taxes—are more likely to believe in freedom and self-reliance. Those who pay more in income taxes may be more likely to demand more government in return.

 Ask yourself: Who’s more conservative? People in low-tax Florida or people in high-tax New York?

 The final reason to oppose a tax hike on the poor and working class is that it’s simply immoral. It’s wrong to needlessly take someone’s income before that person is able to meet all his family’s needs.

Raising taxes on anyone is a bad idea for a Republican. Having Uncle Sam pick the pockets of the poorest 40% of Americans is a bad idea for anyone.

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