The 47 or 67 Percent?


You can’t discuss the 2012 presidential election without mentioning “the 47 percent.”

Presidential candidate Mitt Romney’s now-infamous gaffe, in which he asserted that 47 percent of Americans don’t pay federal taxes and would never vote Republican, highlighted what he saw as a stark contrast between “makers” and “takers” in American society.

We all know how Governor Romney’s story ended. But what about the 47 percent? Who, exactly, makes up this near-majority of the American populous?

Governor Romney’s statement is factually accurate—in 2009, 47 percent of Americans did not pay income taxes. But it also implies that the 47 percent was a static group of Americans who consumed government assistance, year after year, without contributing their share.

According to Assistant Professor of Economics and Public Policy Nirupama Rao, that’s a dangerous assumption to make. More importantly, the data doesn’t back that up.

The 47 percent is, in fact, a fluid group—Americans fall in and out of federal income tax qualification throughout the ebbs and flows of our lives. We take time off to raise a family. We’re unemployed for a time. We go to college. We retire.

Professor Rao used “panel data”—data that tracks a static group of participants over time—to measure this churn in tax eligibility, and found that of the people who at some point in their lives fail to owe taxes, the vast majority return to pay after just one year. What’s more, 67 percent of Americans do not owe federal income taxes for at least one year. Two-thirds of Americans.

Professor Rao’s findings do more than dispel a common fallacy: They provide invaluable insights into America’s social safety net. Moreover, it highlights the work policymakers must do to address the share of Americans unable to exit zero-tax-liability status long-term.