If you are part of the 47% that were insulted by Romney's comments in May, take a minute to think about this for a moment...what if Mitt Romney was right? I'm not talking to you if you are on unemployment or social security or if you are in the Armed Forces, I'm talking to those who get goodies from the government, but still earn a living wage.
If you receive the Earned Income Tax credit, and still make a living wage would you go without it? Would you fight against someone who tried to take it away?
In order for the government to be solvent, you need at least 2 and 1/2 wage earners to pay for one person receiving a government goody. If you received more back from the government than you paid in, you are not one of the wage earners paying into the system, even if you are earning money and receive no other federal assistance.
Here is the real challenge facing the US Congress in the next 2 to 4 years. Reduce the number of people who pay no income taxes to 30% from the current 49%. Then ensure that the 30%-tile of wage earners in this country is receiving a living wage. Right now, people at the 30%-tile need to earn about 8,000 more per year than they do now.
No politician can promise you a 34% wage increase. Fortunately, neither major party has been that bold. I do not excuse what Mitt Romney has said. It may go down as the biggest blunder since Walter Mondale's promise to raise taxes in 1984. However, what is being lost in the message is this: Let's build the economy so that fewer people need government assistance.
Congress can pass laws ensuring that a higher percentage of the people pay taxes. This would not be very popular in a recession and not popular at all if people making between 100,000 and 250,000 per year are getting a tax cut. So, even with republicans in office, that 47% is probably going to remain.
If anyone is to reduce to 47% down to 30% one has to focus on improving the economy and creating jobs. There are only 2 sure-fire ways to see wage inflation. First is to flip the supply/demand equation on jobs. Right now, with unemployment so high, there is downward pressure on wages. If employees are in demand, and there are more jobs than people to fill them, wages will increase.
After the flip, then the debate about where the limit for the EITC should be can begin.
But the economy is the most important thing right now.
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