Lucky duckies
Encyclopedia
Lucky duckies is a term that was used in Wall Street Journal editorials starting on 20 November 2002 to refer to Americans
who pay no federal income tax because they are at an income level that is below the tax line (after deductions
and credits). The term has outlived its original use to become a part of the informal terminology used in the tax reform debate in the United States.
The worry of the Journal’s editorialist was that “as fewer and fewer people are responsible for paying more and more of all taxes, the constituency for tax cutting, much less for tax reform, is eroding. Workers who pay little or no taxes can hardly be expected to care about tax relief for everybody else. They are also that much more detached from recognizing the costs of government.”
For example, according to the editorial:
The Journal published three articles using the phrase “lucky duckies”: “The Non-Taxpaying Class”, the original article, on 20 November 2002; “Lucky Duckies Again” (20 January 2003); and “Even Luckier Duckies” (3 June 2003).
, in 2006 the Internal Revenue Service received 134,372,678 individual income tax returns, of which 90,593,081 (67.42%) showed that they paid or owed federal income tax for 2005. That is, 32.58% of those Americans who filed income tax returns did not owe any federal income tax at all for 2005. This percentage increased substantially in 2008, and for 2009 was 47%.
The federal income tax is only one of several taxes Americans pay. Americans who pay zero federal income taxes do pay other taxes, such as payroll taxes, excise taxes, sales tax
es, tariffs, gift taxes, unemployment taxes
, state income tax
es, property tax
es, and self-employment taxes (a.k.a. FICA).
Federal payroll taxes are imposed on nearly every American with income from employment (there are exceptions for certain students, certain religious objectors, and certain state/local government employees who participate in a state/local pension). Federal self-employment taxes are imposed on nearly every American with net income from self-employment above $400 (again with exceptions for certain religious objectors). So almost all Americans with some earned income do pay some federal taxes. However, the US also allows refundable tax credits to certain individuals, which can lower their income taxes below zero. When these refundable tax credits equal or exceed other federal taxes, the individual is said to pay "no net federal taxes."
As of 2006, according to New York Times columnist David Leonhardt
, approximately 10% of Americans paid no net federal taxes . Mr. Leonhardt did not have figures for 2010, and there were several refundable tax credits which were created or expanded between 2006 and 2010.
According to Congressional Budget Office
estimates, the lowest earning 20% of Americans (24.1 million households earning an average of $15,900 in 2005) paid an "effective" federal tax rate of 3.9%, when taking into account income tax, social insurance tax, and excise tax. For comparison, the same study found that the highest earning 1% of Americans (1.1 million households earning an average of $1,558,500 in 2005) paid an "effective" federal tax rate of 21.9%, when including the same three types of taxes.
(R
-S.C.
) told The New Yorker
:
The Journal was frequently mocked for its use of the term “lucky duckies” to refer to people whose lack of a federal income tax burden is the direct result of their lower income. This attitude was satirized as “let them eat cake”-style myopia.
Ruben Bolling
’s Tom the Dancing Bug
comic in Salon
magazine, for instance, periodically features a poor duck who keeps “outwitting” a fat, top-hatted oligarch by cleverly submitting to the misfortunes of his economic class.
Jonathan Chait, in The New Republic, reacted to the Journal editorial by writing:
And one "lucky ducky" wrote to the Journal editor, offering to share his luck (in a form of logical argument sometimes known as a modest proposal
):
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
who pay no federal income tax because they are at an income level that is below the tax line (after deductions
Tax deduction
Income tax systems generally allow a tax deduction, i.e., a reduction of the income subject to tax, for various items, especially expenses incurred to produce income. Often these deductions are subject to limitations or conditions...
and credits). The term has outlived its original use to become a part of the informal terminology used in the tax reform debate in the United States.
The original argument
The Journal defined the term in this way:Who are these lucky duckies? They are the beneficiaries of tax policies that have expanded the personal exemption and standard deductionStandard deductionThe standard deduction, as defined under United States tax law, is a dollar amount that non-itemizers may subtract from their income and is based upon filing status. It is available to US citizens and resident aliens who are individuals, married persons, and heads of household and increases every...
and targeted certain voter groups by introducing a welter of tax credits for things like child care and education. When these escape hatches are figured against income, the result is either a zero liability or a liability that represents a tiny percentage of income.
The worry of the Journal’s editorialist was that “as fewer and fewer people are responsible for paying more and more of all taxes, the constituency for tax cutting, much less for tax reform, is eroding. Workers who pay little or no taxes can hardly be expected to care about tax relief for everybody else. They are also that much more detached from recognizing the costs of government.”
For example, according to the editorial:
Say a person earns $12,000. After subtracting the personal exemption, the standard deduction and assuming no tax credits, then applying the 10% rate of the lowest bracket, the person ends up paying a little less than 4% of income in taxes. It ain't peanuts, but not enough to get his or her blood boiling with tax rage.
The Journal published three articles using the phrase “lucky duckies”: “The Non-Taxpaying Class”, the original article, on 20 November 2002; “Lucky Duckies Again” (20 January 2003); and “Even Luckier Duckies” (3 June 2003).
Expansion and limits of the original argument
In recent years, the number and percentage of Americans who pay no federal income tax has increased. According to a 2007 report by the Statistics of Income division of the Internal Revenue ServiceInternal Revenue Service
The Internal Revenue Service is the revenue service of the United States federal government. The agency is a bureau of the Department of the Treasury, and is under the immediate direction of the Commissioner of Internal Revenue...
, in 2006 the Internal Revenue Service received 134,372,678 individual income tax returns, of which 90,593,081 (67.42%) showed that they paid or owed federal income tax for 2005. That is, 32.58% of those Americans who filed income tax returns did not owe any federal income tax at all for 2005. This percentage increased substantially in 2008, and for 2009 was 47%.
The federal income tax is only one of several taxes Americans pay. Americans who pay zero federal income taxes do pay other taxes, such as payroll taxes, excise taxes, sales tax
Sales tax
A sales tax is a tax, usually paid by the consumer at the point of purchase, itemized separately from the base price, for certain goods and services. The tax amount is usually calculated by applying a percentage rate to the taxable price of a sale....
es, tariffs, gift taxes, unemployment taxes
Federal Unemployment Tax Act
The Federal Unemployment Tax Act is a United States federal law that imposes a federal employer tax used to help fund state workforce agencies. Employers report this tax by filing an annual Form 940 with the Internal Revenue Service...
, state income tax
State income tax
State and local income taxes are imposed in addition to Federal income tax. State income tax is allowed as a deduction in computing Federal income tax, subject to limitations for individuals. Some localities impose an income tax, often based on state income tax calculations. Forty-three states...
es, property tax
Property tax
A property tax is an ad valorem levy on the value of property that the owner is required to pay. The tax is levied by the governing authority of the jurisdiction in which the property is located; it may be paid to a national government, a federated state or a municipality...
es, and self-employment taxes (a.k.a. FICA).
Federal payroll taxes are imposed on nearly every American with income from employment (there are exceptions for certain students, certain religious objectors, and certain state/local government employees who participate in a state/local pension). Federal self-employment taxes are imposed on nearly every American with net income from self-employment above $400 (again with exceptions for certain religious objectors). So almost all Americans with some earned income do pay some federal taxes. However, the US also allows refundable tax credits to certain individuals, which can lower their income taxes below zero. When these refundable tax credits equal or exceed other federal taxes, the individual is said to pay "no net federal taxes."
As of 2006, according to New York Times columnist David Leonhardt
David Leonhardt
David Leonhardt is the Washington bureau chief of The New York Times. He joined The Times in 1999 and wrote the "Economics Scene" column, and for the Times Sunday Magazine. Before coming to The Times, he wrote for Business Week and The Washington Post...
, approximately 10% of Americans paid no net federal taxes . Mr. Leonhardt did not have figures for 2010, and there were several refundable tax credits which were created or expanded between 2006 and 2010.
According to Congressional Budget Office
Congressional Budget Office
The Congressional Budget Office is a federal agency within the legislative branch of the United States government that provides economic data to Congress....
estimates, the lowest earning 20% of Americans (24.1 million households earning an average of $15,900 in 2005) paid an "effective" federal tax rate of 3.9%, when taking into account income tax, social insurance tax, and excise tax. For comparison, the same study found that the highest earning 1% of Americans (1.1 million households earning an average of $1,558,500 in 2005) paid an "effective" federal tax rate of 21.9%, when including the same three types of taxes.
Precedents
In 2001, U.S. Representative (now Senator) Jim DeMintJim DeMint
James Warren "Jim" DeMint is the junior U.S. Senator from South Carolina, serving since 2005. He is a member of the Republican Party and a leader in the Tea Party movement. He previously served as the U.S. Representative for from 1999 to 2005.-Early life and education:DeMint was born in...
(R
Republican Party (United States)
The Republican Party is one of the two major contemporary political parties in the United States, along with the Democratic Party. Founded by anti-slavery expansion activists in 1854, it is often called the GOP . The party's platform generally reflects American conservatism in the U.S...
-S.C.
South Carolina
South Carolina is a state in the Deep South of the United States that borders Georgia to the south, North Carolina to the north, and the Atlantic Ocean to the east. Originally part of the Province of Carolina, the Province of South Carolina was one of the 13 colonies that declared independence...
) told The New Yorker
The New Yorker
The New Yorker is an American magazine of reportage, commentary, criticism, essays, fiction, satire, cartoons and poetry published by Condé Nast...
:
“I think we’ve got a major crisis in democracy… We assume that voters will restrain the growth of government because it becomes burdensome to them personally. But today fewer and fewer people pay taxes, and more and more are dependent on government, so the politician who promises the most from government is likely to win. Every day, the Republican Party is losing constituents, because every day more people can vote themselves more benefits without paying for it. The tax code will destroy democracy, by putting us in a position where most voters don’t pay for government.”
Backlash from critics
Ruben Bolling
Ruben Bolling
Ruben Bolling is a pseudonym for Ken Fisher, a cartoonist, the author of Tom the Dancing Bug.- Biography :Bolling, who has no formal art training, read many comics when he was a child, and sometimes features their styles in his work...
’s Tom the Dancing Bug
Tom the Dancing Bug
Tom the Dancing Bug is a weekly satirical comic strip by cartoonist and political commentator Ruben Bolling that covers current events from a liberal point of view. The strip appears in mainstream and alternative weekly newspapers, as well as on the Boing Boing website. Tom the Dancing Bug won...
comic in Salon
Salon.com
Salon.com, part of Salon Media Group , often just called Salon, is an online liberal magazine, with content updated each weekday. Salon was founded by David Talbot and launched on November 20, 1995. It was the internet's first online-only commercial publication. The magazine focuses on U.S...
magazine, for instance, periodically features a poor duck who keeps “outwitting” a fat, top-hatted oligarch by cleverly submitting to the misfortunes of his economic class.
Jonathan Chait, in The New Republic, reacted to the Journal editorial by writing:
One of the things that has fascinated me about The Wall Street Journal editorial page is its occasional capacity to rise above the routine moral callousness of hack conservative punditry and attain a level of exquisite depravity normally reserved for villains in James BondJames BondJames Bond, code name 007, is a fictional character created in 1953 by writer Ian Fleming, who featured him in twelve novels and two short story collections. There have been a six other authors who wrote authorised Bond novels or novelizations after Fleming's death in 1964: Kingsley Amis,...
movies.
And one "lucky ducky" wrote to the Journal editor, offering to share his luck (in a form of logical argument sometimes known as a modest proposal
A Modest Proposal
A Modest Proposal for Preventing the Children of Poor People in Ireland From Being a Burden on Their Parents or Country, and for Making Them Beneficial to the Publick, commonly referred to as A Modest Proposal, is a Juvenalian satirical essay written and published anonymously by Jonathan Swift in...
):
I will spend a year as a Wall Street Journal editor, while one lucky editor will spend a year in my underpaid shoes. I will receive an editor's salary, and suffer the outrage of paying federal income tax on that salary. The fortunate editor, on the other hand, will enjoy a relatively small federal income tax burden, as well as these other perks of near poverty: the gustatory delights of a diet rich in black beans, pinto beans, navy beans, chickpeas and, for a little variety, lentils; the thrill of scrambling to pay the rent or make the mortgage; the salutary effects of having no paid sick days; the slow satisfaction of saving up for months for a trip to the dentist; and the civic pride of knowing that, even as a lucky ducky, you still pay a third or more of your gross income in income taxes, payroll taxes, sales taxes and property taxes.
See also
- Taxation in the United StatesTaxation in the United StatesThe United States is a federal republic with autonomous state and local governments. Taxes are imposed in the United States at each of these levels. These include taxes on income, property, sales, imports, payroll, estates and gifts, as well as various fees.Taxes are imposed on net income of...
- Earned income tax creditEarned income tax creditThe United States federal earned income tax credit or earned income credit is a refundable tax credit primarily for individuals and families who have low to moderate earned income. Greater tax credit is given to those who also have qualifying children...
- Working poorWorking poor- Definition in the United States :There are several popular definitions of "working poor" in the United States. According to the US Department of Labor, the working poor "are persons who spent at least 27 weeks [in the past year] in the labor force , but whose incomes fell below the official...
External links
- The Non-Taxpaying Class: Those lucky duckies! Wall Street Journal 20 November 2002
- Lucky Duckies Again: Look at who won't pay taxes under Bush's plan Wall Street Journal 20 January 2003
- Even Luckier Duckies: When a tax cut becomes a welfare check Wall Street Journal 3 June 2003
- Low-Income Taxpayers: New Meat for the Right E.J. Dionne The Washington Post 26 November 2002
- Hey, Lucky Duckies! Paul Krugman New York Times 3 December 2002
- Get lucky The New Republic 17 December 2002
- March of the Lucky Duckies Salon 21 December 2002
- Tax the Poor Radley Balko Fox News 9 April 2003
- Tom the Dancing Bug, featuring Lucky Ducky
- The Tax Foundation — Number of Americans Paying Zero Federal Income Tax Grows to 43.4 Million
- Is it Really So Tough to Be Rich? The New, Brazen, and Completely Dishonest Attack on Progressive Taxation by Neil H. Buchanan, FindLaw 23 April 2007