In 2012, Mitt Romney complained that too many Americans were “takers” who paid no income taxes. One campaign later, Republicans are changing course: On Monday, Donald Trump became the latest Republican presidential candidate to propose exempting more families from federal income taxes.
Trump’s plan would eliminate federal income taxes for individuals earning less than $25,000 and married couples earning less than $50,000. That means that more than half of all Americans would owe nothing, including about 31 million households who currently pay at least some tax. Right now, about 40 percent of American households don’t pay income taxes, according to the nonpartisan Tax Policy Center.
Trump’s proposal is essentially a more extreme version of the tax plan Jeb Bush released earlier this month. The Bush campaign estimates that its plan would eliminate taxes for about 15 million families, bringing the share owing no taxes to about 50 percent. (It isn’t possible to calculate the exact share without knowing more about the plans and the direction of the economy.)
A third major plan, released by Marco Rubio earlier this year, would also increase the number of Americans who don’t owe taxes, though by exactly how much isn’t clear, according to Kyle Pomerleau, an economist at the Tax Foundation, a Washington think tank. (Rand Paul, the only other Republican presidential candidate to release a detailed tax plan, would create a flat tax that would cut taxes overall but would leave the share of Americans paying nothing largely unchanged.)
Taken together, Bush, Rubio and Trump’s plans represent a major shift in direction for the Republican Party. Romney notoriously complained that 47 percent of Americans don’t pay taxes, and while those comments were recorded surreptitiously, the underlying idea — that too many Americans are “takers” rather than “makers” — was a core part of the Republican message in recent elections. Romney and his running mate, Wisconsin Congressman Paul Ryan, proposed a tax plan that focused on reducing tax rates by “broadening the base,” eliminating deductions and credits that benefit lower- and middle-income households.
Romney’s 47 percent figure was always a bit misleading. It included retirees, most of whom paid income tax during their working years, and low-wage workers who didn’t pay income tax but did pay Social Security and Medicare taxes. Non-elderly households that pay neither income nor payroll taxes account for less than 5 percent of households, according to the Tax Policy Center; most of them earn less than $20,000 a year.
The share of Americans paying no income taxes has also been falling in recent years. The figure was as high as 50 percent during the recession, as incomes fell and stimulus policies cut taxes. Since then, the share has fallen steadily, and it will likely continue to fall if current policies remain in place.
In a Wall Street Journal op-ed last year Ryan publicly repudiated the “makers and takers” language and called for Republicans to look for creative ways to help poor people. Ryan now wants to expand the earned income tax credit, which benefits low-income workers. Former Romney adviser Oren Cass recently proposed a “wage subsidy,” through which taxpayers would essentially top up low-wage workers’ paychecks. Ohio Gov. John Kasich, who also is running for president, hasn’t yet released his own tax plan but has defended his decision to expand Medicaid on the grounds that it will help the poor.
Despite the shift in rhetoric, however, all of the Republican plans proposed thus far would also entail major tax cuts for the wealthy. To some extent that’s inevitable: Because the rich pay a disproportionate share of taxes, they also benefit disproportionately from nearly any major tax cut. But Trump and other Republicans also propose cutting or eliminating taxes that specifically target the wealthy, such as the alternative minimum tax and the estate tax. Pomerleau, the Tax Foundation economist, estimated that Bush’s proposal to eliminate the carried-interest loophole would increase taxes on the wealthy by about $1 billion. But lowering the top tax rate to 28 percent from 39.5 percent, as Bush has also proposed, would cut taxes on top earners by nearly $100 billion.
Read more: Jeb Bush’s Tax Plan Is Pretty Weird