50 percent of people who are getting something for nothing

Nearly half of US households escape fed income tax


Tax Day is a dreaded deadline for millions, but for nearly half of U.S. households it's simply somebody else's problem.

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.

Most people still are required to file returns by the April 15 deadline. The penalty for skipping it is limited to the amount of taxes owed, but it's still almost always better to file: That's the only way to get a refund of all the income taxes withheld by employers.

In recent years, credits for low- and middle-income families have grown so much that a family of four making as much as $50,000 will owe no federal income tax for 2009, as long as there are two children younger than 17, according to a separate analysis by the consulting firm Deloitte Tax.

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.

Comment: You have to wonder if this is good for our democracy!


  1. My family is actually one of those exempt from the federal income tax, but when we count all the taxes we did pay--FICA, property, sales, excise, state income--our effective tax rate is still above 25%.

    And personally, I'd be glad to pay more Constitutional taxes (duties, imposts, excises, and such) if I could get out of paying for two federal programs that I will not be benefiting from--Social Security and Medicare. (these boondoggles amount for about 60% of my family's overall tax burden)

  2. Bert and others. I am OK with the graduated income tax rate. I know that it takes a lot of money to raise kids and that those deductions for you are worth it for society. So I hope you did not take it the wrong way.

    I am a big proponent of tax reform. Perhaps the flat tax. But without spending reform our country is in deep trouble financially!

  3. No offense was taken--it's just that looking at the income tax alone is a seriously simplistic way of looking at the overall tax burden.

    I'd also quibble with the idea that a lot of government spending is really beneficial. I've actually calculated that corn subsidies actually hurt farmers. (will post on that)


Any anonymous comments with links will be rejected. Please do not comment off-topic