47% of Americans don’t pay income taxes
Interesting, I never new this. This is income tax, not SS or Medicare, still, that’s a lot of people. As this post suggests though, most of that is due not to deductions, but to ‘tax credits’ given tax payers, namely the “Earned Income Credit” (affecting a small portion of the population who are poor) and the “Child Tax Credit” (affecting low and middle income families). The former is Democrat-supported, the latter is a bipartisan-supported credit and the biggest portion and contributor to the numbers of people who don’t have to pay federal income taxes. In fact, Republican congresses (with some Democratic help) have been part of this move towards “socialism” (the top half income earners paying for the bottom half). From the post linked above:
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- In 1997 every “normal” married couple with two children that earned $24,000 or more (in today’s dollars) had to pay at least some income taxes. The top nonpayer threshold for a family of this size was just under $24,000. This means there were some four-person families with income just below $24,000 that owed no income taxes.
- In 1997 a Republican majority Congress and President Clinton enacted the Balanced Budget Act. At the insistence of Congressional Republicans, this law created a $400-per-child tax credit which began in 1998. This caused the top nonpayer threshold to jump more than $7,000, to about $31,300. Millions of families with kids with incomes between $24,000 and $31,300 were “taken off the rolls” because the child tax credit wiped out the small income tax liability they owed.
- As a result of the 1997 law, in 1999 the child tax credit automatically increased to $500 per child, and the threshold for a married family with two kids grew to $32,800 in today’s dollars.
In 2001 President Bush and the Republican Congress enacted a major tax law that increased the child tax credit to $600. This law also introduced the 10% income tax bracket, which lowered by 5 percentage points the lowest income tax rate. The combination of these two tax changes raised the top nonpayer threshold to $38,700. That law further phased in over time increases in the child credit to $1,000 per child.
- The 2003 tax law enacted by President Bush and the Republican Congress accelerated the $1,000 per child amount to be effective immediately. This increased the threshold to $47,400 in 2003. That’s a huge jump. It was incredibly popular, and it helped create political impetus for the 2003 law which also accelerated rate reductions and cut capital gains and dividend rates.
Of course the Democrats have had a hand in increasing this too (keep reading the article).
I’m afraid that most people, Republicans, Tea Party, Democrats and the like, would not go for a cut in this credit. It would be political suicide.
We need to cut spending, but that will not balance the budget (unless you want to cut defense and a few other huge expenses) so we need to change the tax code. I suspect that’s not going to happen.
Why do so many Americans pay no income taxes? | KeithHennessey.com.
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