Sen. Orrin Hatch To Poor Americans: “Pay Up!”

Sen. Orrin Hatch

Do the poor and middle-class need to “share some of the responsibility” in helping to reduce America’s debt burden? Are the wealthiest Americans overtaxed? Yes, according to Sen. Orrin Hatch (R-UT), whose comments on the Senate floor last week have sparked controversy.

The national embrace of government austerity and the expanding appetite among many lawmakers for drastic spending cuts aimed mostly at government assistance to low-income and middle-class Americans is not enough for Sen. Hatch. While some dare to question whether the wealthy ought to be compelled to give up their decade-old tax cuts during this time of fiscal crisis, Sen. Hatch believes it is the bottom half of American society that needs to pay up.

Speaking against a symbolic measure in the Senate last week that would have endorsed the end of tax cuts for millionaires, Sen. Hatch announced his strong opposition to the resolution. In referring to the lawmakers supporting the idea of tax hikes for the super-rich,  Hatch remarked that “I hear how they’re so caring for the poor and so forth.”

Hatch went on to say, “the poor need jobs! And they also need to share some of the responsibility.”

Sen. Orrin Hatch (R-Utah) voted against beginning debate on a measure that would have the Senate declare the rich should share the pain of debt reduction Thursday, a day after arguing that it’s the poor and middle class who need to do more.

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“The top 1 percent of the so-called wealthy pay 38 percent of all income tax. The top 10 percent are paying 70 percent of all income tax,” Hatch said. “The top 50 percent pay somewhere near 98 percent of all income taxes. 51 percent don’t pay anything,” Hatch said, suggesting the payroll taxes that the poor and middle classes pay towards Social Security yields them an especially generous benefit.

The comments made on the Senate floor last week were not the first instance of Senator Orrin Hatch demanding accountability from the low-income Americans he considers nothing more than lazy slackers.

In May of this year, Hatch complained of an “unbalanced tax code” that  asks too much of the wealthy. He said that he doesn’t want to “hurt the poor,” but that they have a “civic duty” to “help this government…be better.”

As detailed in the two instances noted above, Orrin Hatch seems to beleive that because low-income Americans are, well, making very little income, their tax burden is either minuscule or non-existent and that this sweeping 51 percent swath of the country paying no federal income tax is where any new revenues must come from. It’s a belief shared by many conservatives, including 2012 Republican presidential candidate Rep. Michele Bachmann.

Bachmann, a congresswoman from Minnesota, told the Wall Street Journal earlier this year that “I think everyone should pay something,” and revealed that her tax proposal would force every American to pay taxes by eliminating all deductions, including those that are income-based.

Are the people that insist that poor Americans and the middle-class are somehow getting a free ride and aren’t paying their share right? Is half of the country getting rich off of the income taxes paid by the rich? The easy answer is “no.”

Such a discussion is too lengthy and intricate for this forum, but the basic facts show that at no other time in our history have low-income citizens faced such fiscal disadvantages compared with the wealthiest slice of American society.

The poor and middle-class are facing unprecedented income disparity in the United States. The richest Americans are paying most of the taxes because they are taking in more and more of the income generated in the United States. The income gap between the rich and the poor has become such a crisis that the USA now ranks 42nd in income inequality worldwide, behind Cameroon and Ivory Coast, and ten percent of the total income generated in 2008 was allocated to just the top 0.1 percent of earners.

And while the rich do pay the majority of federal taxes, their tax rate has been falling for decades. Data from the non-partisan Tax Policy Center shows how the effective individual income tax rate for the top one percent of earners in America has steadily shrunk to a 2007 rate of 19 percent, the lowest in twenty years.

Perhaps most glaring in Sen. Hatch’s hypothesis that the poor are somehow “undertaxed” is his complete omission of the state and local taxes faced by low-income Americans, as well as  federal taxes besides the income tax .  Working Americans face federal payroll taxes at rates of 8.8 percent for those in bottom 20 percent of earners but only 1.6 percent for the top one percent of taxpayers.

Some 86 percent of working households pay more in payroll taxes than in federal income taxes. In fact, low- and moderate-income people pay a much larger share of their incomes in federal payroll taxes than high-income people do: taxpayers in the bottom 20 percent of the income scale paid an average of 8.8 percent of their incomes in payroll taxes in 2007, compared to just 1.6 percent for taxpayers in the top 1 percent of the income distribution

And most regressive of all are Social Security taxes that are capped in 2011 at a wage base of $106,800. That wage cap means someone earning a million dollars in yearly wages will pay the same amount in federal Social Security taxes as a person earning ten percent of their income, for a millionaire’s tax rate of a stunning 0.66 percent.

But such data is ignored by many politicians and commentators that insist working Americans aren’t doing their national duty if they don’t pay any income taxes, no matter the regressive tax burden that is the reality for working, low-income Americans.

Perhaps the average American should be happy Sen. Hatch just wants to raise their taxes. One television personality actually believes those people that do not pay any federal income taxes shouldn’t be allowed to vote.