Revisiting the common myth from the presidential campaign that President-elect Barack Obama's proposed tax cuts would go to “people who don't pay taxes,” Fox News Studio B host Shepard Smith falsely suggested that a $500 individual tax credit, included in Obama's proposed economic recovery plan, would benefit people who don't currently pay taxes. During the January 6 edition of Studio B, Smith asked Sen. John Ensign (R-NV): “Senator, the president-elect wants a big economic stimulus package ready to sign as soon as he take office. It's somewhere in the neighborhood of $800 billion over two years, $300 billion of that in what we're being told is middle class and business tax cuts. Senator, I know we don't know the details yet, but $300 billion in tax cuts -- how do you cut taxes on people who don't pay taxes?” In fact, all American workers are required to pay Social Security and Medicare taxes under the Federal Insurance Contributions Act (FICA).
A January 4 New York Times article reported that Obama's proposal includes tax cuts of “about $270 billion to $310 billion” to individuals and businesses. The article continued:
About half of that would go to workers under what Mr. Obama during his campaign called the Making Work Pay credit, worth up to $500 for individuals and $1,000 for families. The Obama campaign estimated that about 150 million Americans making less than $200,000 would qualify, including those who make too little to pay federal income taxes but would receive a check that would offset Social Security and Medicare payroll taxes.
Indeed, the "Making Work Pay" tax credit Obama included in his economic proposal during the presidential race would provide a “tax credit of up to $500 per person, or $1,000 per working family”:
This refundable income tax credit will provide direct relief to American families who face the regressive payroll tax system. It will offset the payroll tax on the first $8,100 of their earnings while still preserving the important principle of a dedicated revenue source for Social Security. The “Making Work Pay” tax credit will completely eliminate income taxes for 10 million Americans. The tax credit will also provide relief to self-employed small business owners who struggle to pay both the employee and employer portion of the payroll tax. The “Making Work Pay” tax credit offsets some of this selfemployment tax as well.
Additionally, consumers in the United States are required to pay federal excise taxes, including 18.4 cents per gallon of gasoline. U.S. residents are also subject to state taxes, such as sales, income, and property taxes.
From the January 6 edition of Fox News' Studio B With Shepard Smith:
ENSIGN: At least make sure that you get all of the things that are -- the issues that are out there. Whether they're court issues, whether they're challenged-ballot issues, make sure that they're settled in a way that it doesn't seem like one side or the other stole the election. That's really important in cases like this because people turned out in record numbers in Minnesota. That's a really good thing.
SMITH: They did indeed.
ENSIGN: You don't want to discourage people from turning out because they felt like the race was stolen one way or the other.
SMITH: Senator, the president-elect wants a big economic stimulus package ready to sign as soon as he take office. It's somewhere in the neighborhood of $800 billion over two years, $300 billion of that in what we're being told is middle class and business tax cuts. Senator, I know we don't know the details yet, but $300 billion in tax cuts -- how do you cut taxes on people who don't pay taxes?
ENSIGN: Well, that is one of the discussions that's going to be had up here on Capitol Hill. What they want to do is give tax credits. It's basically like a welfare payment because it's up above and beyond whatever taxes that they pay right now. The business tax credits and some of the things they're talking about there, those are important things, because if businesses don't have money, a lot of these businesses are going to go out of business.
