By JLP | September 26, 2008
Under current tax laws, IRS statistics for 2006 show that 45.6 million tax filers, essentially one-third of all filers, have no tax liability after taking their credits and deductions. “For good or ill,” notes the Tax Foundation, “this is a dramatic 57 percent increase since 2000 in the number of Americans who pay no personal income taxes.”
And consider the fact that in 2006 one third of filers owed no tax – there are millions more who didn’t file, most of whom would probably also owe $0 due to low incomes and tax credits.
Here’s the crazy part: According to the Tax Foundation,
“If all of the Obama tax provisions were enacted in 2009, the number of nonpayers would rise by about 16 million, to 63 million overall, or 44 percent of all tax returns. And if all of the McCain tax proposals were enacted in 2009, the number of nonpayers would rise by about 15 million, to a total of 62 million overall, or roughly 43 percent of all tax filers.”
Assuming that 6-7% of people working in America fail to file tax returns (which I think is a safe assumption, though I admit I’m pulling it out of nowhere) that means that very soon HALF of our population will owe $0 in income taxes – and the other half will be footing the bill for everybody.
Check out the very interesting article at Don’t Mess With Taxes (linked above). The author quotes Scott Hodge, who wrote the paper for the Tax Foundation, who very astutely sums it up:
“It is time for a serious public discussion of whether it is desirable to have so many Americans disconnected from the cost of government and what the consequences are of using the tax system as a vehicle for social policy.”
More from Meg at The World of Wealth