Lucky duckies

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 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 deduction 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 Non-Taxpaying Class:Those lucky duckies!” "The Wall Street Journal" 20 November 2002 [http://www.opinionjournal.com/extra/?id=110002937] ]

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);“Lucky Duckies Again: Look at who won’t pay taxes under Bush’s plan” "The Wall Street Journal" 20 January 2003 [http://www.opinionjournal.com/editorial/feature.html?id=110002938] ] and “Even Luckier Duckies” (3 June 2003).“Even Luckier Duckies: When a tax cut becomes a welfare check” "The Wall Street Journal" 3 June 2003 [http://www.opinionjournal.com/editorial/feature.html?id=110003577] ]

Expansion and criticism of the original argument

Fewer Americans are paying federal income tax

In recent years, the number and percentage of Americans who pay no federal income tax has increased. According to The Tax Foundation:

Forty-four million tax returns filed in 2005 will rightly demand the return of every dollar or more that is being withheld from their paychecks during 2004, according to the Tax Foundation.… In 2000, nearly 30 million people had no income tax liability; the 2004 number represents a 50 percent increase.… “Broadly speaking, the 44 million zero-tax filers are low-income, young, female-headed households, part-time workers and beneficiaries of the $1,000 per-child tax credit,” said Tax Foundation economist J. Scott Moody.

And Moody said that in addition to the 44 million who will have no income tax liability, there are another 14 million who will earn income, but will not earn enough to pay taxes, bringing the total number of Americans not paying taxes to 58 million, and Moody stresses that this is still an underestimate. He said the returns can represent households, which ups the actual number of Americans not paying taxes. [“Record Number of Americans Have No Federal Income Tax Liability” [http://www.nfib.com/object/IO_21429.html] ]

According to a 2007 report by the Statistics of Income division of the Internal Revenue Service, [“SOI Tax Stats — Individual Income Tax Returns Publication 1304” Internal Revenue Service [http://www.irs.gov/taxstats/indtaxstats/article/0,,id=134951,00.html] ] 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.

The poor are still liable for many taxes

Figures discussed in the previous section are sometimes misrepresented to suggest that the poor pay "no" taxes, which is not the case. This is suggested in the original "Journal" article, and in subsequent writings on the issue. For example, the Heritage Foundation writes that

More and more Americans are receiving their education, their health care, and their retirement from the federal government. Yet fewer and fewer Americans actually pay income taxes. Are we close to a tipping point where the non-taxpaying class is larger than the group who pay taxes? [“The American Political Experiment: What the 2005 Index of Dependency Tells Us About Its Prospects” "The Heritage Foundation" press release [http://www.heritage.org/press/events/ev061305a.cfm] ]

However, the federal income tax is only one of several taxes Americans pay. Other taxes, like excise taxes, sales taxes, and especially the payroll tax (a.k.a. FICA), are regressive — that is, the poor pay them at a higher rate relative to their income than do the non-poor. Just because somebody does not pay any federal income tax does not mean that they are part of a “non-taxpaying class,” or even that they pay a smaller percentage of their income in taxes than someone who does pay federal income tax.

Self-interest may not govern opinions on tax policy

The "Journal" editorial suggested that the growing portion of people not paying federal taxes would lead to reduced political pressure to reduce them. However, the concern about people who pay little income tax being unwilling to support income tax reform, as intuitive as it seems, may not in fact be accurate. A large majority of Americans favor the abolition of the estate tax, for instance, even though this tax only applies to a small minority of especially wealthy estates (only the richest 1-2% of Americans are subject to that tax).Fact|date=June 2008

Precedents

In 2001, U.S. Representative (now Senator) Jim DeMint (R-S.C.) told "The New Yorker":

“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.” [Lemann, Nicholas “Bush’s Trillions: How to buy the Republican majority of tomorrow” "New Yorker" 19 February 2001 [http://web.archive.org/web/20030824121054/http://www.business.uiuc.edu/seppala/econ102/newyork.html] ]

Tax resistance and lucky duckies

Tax resisters are taking advantage of the “lucky ducky” phenomenon to reduce their federal income tax to zero legally. One wrote:

When the war on Iraq started, I stopped paying the federal income tax and started working for my values instead of against them. I quit my job and deliberately reduced my income to the point where I no longer owe federal income tax. I’ve transformed my life, concentrating on what really matters, so that I can live well and securely on a lower income. I’m taking a practical approach, learning about the tax laws and about how to live well by being down-to-earth and sensibly frugal. I’m learning how to live within my means without paying federal income tax — honestly, peacefully, and legally. [Gross, David "The Picket Line" [http://www.sniggle.net/Experiment/index.php] ]

Backlash from critics

[
right|frame|The_opening_panel_to_one_of_Ruben_Bolling’s_comic_strips_that_features_Lucky_Ducky_[Bolling, Ruben “All’s Fair in Class & War!” 12 June 2003 [http://images.salon.com/comics/boll/2003/06/12/boll/story.gif] ] ] 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:

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 Bond movies. [as quoted in Manjoo, Farhad “March of the ‘lucky duckies’” "Salon" 21 December 2002 [http://dir.salon.com/story/news/feature/2002/12/21/duckies/] ]

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):

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. [Petersen, Pier “‘Lucky Duckie’ Invites Editors into his Pond” as quoted in “&c.: A Daily Journal of Politics” "The New Republic Online" 12 June 2003 [http://web.archive.org/web/20030626024327/http://www.tnr.com/etc.mhtml?pid=475] ]

References

See also

* Taxation in the United States
* Earned income tax credit
* Working poor

External links

* [http://www.opinionjournal.com/extra/?id=110002937 The Non-Taxpaying Class: Those lucky duckies!] "Wall Street Journal" 20 November 2002
* [http://www.opinionjournal.com/editorial/feature.html?id=110002938 Lucky Duckies Again: Look at who won't pay taxes under Bush's plan] "Wall Street Journal" 20 January 2003
* [http://www.opinionjournal.com/editorial/feature.html?id=110003577 Even Luckier Duckies: When a tax cut becomes a welfare check] "Wall Street Journal" 3 June 2003
* [http://www.washingtonpost.com/ac2/wp-dyn?pagename=article&node=&contentId=A39211-2002Nov25&notFound=true Low-Income Taxpayers: New Meat for the Right] E.J. Dionne "The Washington Post" 26 November 2002
* [http://www.gregsopinion.com/archives/002640.html Hey, Lucky Duckies!] Paul Krugman "New York Times" 3 December 2002
* [http://72.14.207.104/search?q=cache:3Q57KTgdGrwJ:www.tnr.com/doc.mhtml Get lucky] "The New Republic" 17 December 2002
* [http://archive.salon.com/news/feature/2002/12/21/duckies/print.html March of the Lucky Duckies] "Salon" 21 December 2002
* [http://www.foxnews.com/story/0,2933,83696,00.html Tax the Poor] Radley Balko "Fox News" 9 April 2003
* [http://dir.salon.com/topics/ruben_bolling/?em=lucky+ducky Tom the Dancing Bug, featuring Lucky Ducky]
* [http://www.taxfoundation.org/publications/show/1410.html The Tax Foundation — Number of Americans Paying Zero Federal Income Tax Grows to 43.4 Million]
* [http://writ.news.findlaw.com/commentary/20070423_buchanan.html 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