By Mike Lillis - 05/08/12 06:02 PM EDT
Hoyer rejects Cantor's suggestion to extend income tax to poorer Americans
Rep. Steny Hoyer (D-Md.) this week rejected the idea of expanding federal income taxes to low-income people who are currently exempt.
House Majority Leader Eric Cantor (R-Va.) last month suggested that all Americans — even the poorest — should pay some income tax in order to make some contribution to federal programs. Broadening that tax base, Cantor argued, would allow Congress to cut rates for the other people currently paying into the system.
But Hoyer, the Democratic whip, said low-income workers already pay plenty to the federal government through payroll taxes, mandated under the Federal Insurance Contributions Act (FICA), that go to pay for Social Security and Medicare benefits.
"When I hear that rhetoric [about requiring everyone to pay income tax], it largely comes from folks who don't understand how high a percentage the lower income people are paying on the FICA tax," Hoyer said Tuesday during his weekly press briefing in the Capitol. "Fifty percent of Americans pay more FICA tax than they do income tax — and the reason being that they're not making a lot of money."
Hoyer warned that applying the income tax to the lowest earners would only exacerbate the country's "growing disparity between those who have a little and those who have a lot." He said the burden of funding the government and cutting deficits should fall to higher earners who have those resources to give.
"As we see this disparity in incomes growing and growing in America, it ought to be a worry to all of us," Hoyer said. "We need to ask those who have a lot to pay a fair share."
At a public breakfast sponsored by Politico last month, Cantor faulted the current tax system for allowing many Americans to pay nothing in federal income taxes, pushing the notion that everyone should contribute.
"[O]ver 45 percent of the people in this country don’t pay income taxes at all, and we have to question whether that’s fair, and should we broaden the base in a way that we can lower rates for everybody who is paying taxes?" Cantor said.
"I’ve never believed that you go raise taxes on those that have been successful, that are paying in, taking away from them, so that you just hand out and give to someone else," Cantor said.
Hoyer said the FICA tax ensures that most Americans aren't getting a free ride. He noted that, because payroll taxes are levied only on the first $110,100 of earnings, higher-income Americans actually pay a lower FICA tax rate than low income people.
"What you want to look at," Hoyer said, "is the burden that we place on people."