Thursday, April 8, 2010

Wow: "Nearly Half Of US Households Escape Federal Income Tax"

I'm overly simplifying it but this would mean that half the country is some sort of producer and the other half is some sort of Moocher.

About 47 percent will pay no federal income taxes at all for 2009. Either their incomes were too low, or they qualified for enough credits, deductions and exemptions to eliminate their liability. That's according to projections by the Tax Policy Center, a Washington research organization.
[. . .]
Tax cuts enacted in the past decade have been generous to wealthy taxpayers, too, making them a target for President Barack Obama and Democrats in Congress. Less noticed were tax cuts for low- and middle-income families, which were expanded when Obama signed the massive economic recovery package last year.

The result is a tax system that exempts almost half the country from paying for programs that benefit everyone, including national defense, public safety, infrastructure and education. It is a system in which the top 10 percent of earners -- households making an average of $366,400 in 2006 -- paid about 73 percent of the income taxes collected by the federal government.

The bottom 40 percent, on average, make a profit from the federal income tax, meaning they get more money in tax credits than they would otherwise owe in taxes. For those people, the government sends them a payment.

"We have 50 percent of people who are getting something for nothing," said Curtis Dubay, senior tax policy analyst at the Heritage Foundation.

Be sure to read the entire thing.

One thing that the article never takes in account is what if a significant amount of that top ten percentile should decide to 'Go Galt'? Creating a revenue vacuum that would need to be filled. The easiest way to do that is move the scale down by making it the top 15% or so of earners to keep the tax revenue flowing.

Thanks to Stacey.

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