MEAD GRUVER Associated Press writer | Posted: Sunday, September 21, 2008 12:00 am
CHEYENNE, Wyo. (AP) - Cynthia Lummis wants all Americans to be more invested in their government by paying at least some income tax, and more invested in retirement by saving money instead of counting on Social Security.
Tens of millions of American households - perhaps nearly half of them - do not pay federal income tax because they do not make enough money to qualify, according to Lummis, the Republican running for Wyoming's seat in the U.S. House.
"Every American has, receives, benefits from the protections of the U.S. Constitution and I believe everyone should pay a little bit, even if it's $50 a year," she said Thursday.
Lummis said Barack Obama's proposal for income tax relief would rebate money to millions, yet would pay out money to the millions who don't pay income tax.
"They can't get an income tax break because they don't pay any income tax now. So he's calling it a rebate, a tax rebate. But what it is, is a payment to people who aren't paying any taxes already," said Lummis, a former state treasurer and state legislator.
"Rather than give money to people who pay no income tax now, I think it's appropriate to have them on the tax rolls and have them paying just a minuscule amount of money so they can be a participant in our American system of government," she added.
Lummis said 49.5 percent of American households do not pay income tax. The percentage could not be independently verified, although Lummis spokeswoman Rachael Seidenschnur said the figure is based on numbers from the Congressional Budget Office and the group Americans for Tax Reform.
Most income tax, Lummis said, is paid by the rich and middle class.
According to the Internal Revenue Service, the top 50 percent of taxpayers in 2006 paid 97.01 percent of all income taxes, while the bottom 50 percent paid 2.99 percent.
Lummis also would like to privatize Social Security, which is expected to become insolvent in coming decades. She said the first step should be privatization for people who have not yet entered the work force who were born after a certain date. She also suggested raising the retirement age and promoting a national savings ethic.
"People need to have education, more emphasis on the importance of saving," she said. "Tax policy can be adjusted to encourage savings. Public service announcements can be adjusted to encourage savings."
Lummis said one problem with Social Security is that it was never intended to be the sole source of Americans' retirement income, yet many view it as such.
"The fact that it has evolved into the belief by Americans that it is their single source of retirement, has created part of the problem," she said. "The expectations on what Social Security could do for an individual, have been, I think, altered."
She said the stock market's ups and downs can be mitigated if people invest their retirement savings more heavily in stocks at a younger age and bonds as they approach retirement. She pointed out that stocks tend to be riskier but have more potential for growth, while bonds are safer and can provide a smaller but more predictable income.
Gary Trauner, Lummis's Democratic proponent, criticized Lummis's proposal to extend income taxes to people who aren't currently paying them.
"One in every five kids in this country is born and raised in poverty," Trauner said. "A large number of those people are living below the poverty line, and she wants to raise taxes on the people who can least afford it in this country?"
Trauner also opposes privatizing Social Security. He pointed to the tumult on Wall Street over the past week as one reason why.
"I would just ask how all of our millions of Americans that look forward to having Social Security as a safety net would feel today if we had privatized Social Security, and they had been in the marketplace, investing in the market for the last 10 or 15 years," Trauner said.
"They would have lost billions and billions worth of money just in the last week alone."