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One of the most commonly cited statistics about our tax system is that about 50 percent of American tax filers actually pay no federal income taxes. Is that fair<\/i>?<\/p>\nOne of the most commonly cited statistics about our tax system is that about 50 percent of American tax filers actually pay no federal income taxes. Is that fair<\/i>?<\/p>\n
Roberton Williams (whom I recently interviewed here<\/a> and here<\/a>) has a great response<\/a>:<\/p>\n The explanation is simple: the income tax serves two masters. On one Over the past two decades, Congress Those subsidies and incentives came out to $950 billion of tax “expenditures” in 2007. It’s an enormous figure.<\/p>\n But as Williams explained to me, this particular talking point is a This infamous 40-50 percent still pays taxes: local, state, payroll and (Photo: Flickr\/Lel4nd<\/b><\/a>)<\/b> One of the most commonly cited statistics about our tax system is that about 50 percent of American tax filers actually pay no federal income taxes. Is that fair? Roberton Williams (whom I recently interviewed here and here) has a great response: The explanation is simple: the income tax serves two masters. On one hand, […]<\/p>\n","protected":false},"author":1534,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-367542","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/367542","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/1534"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=367542"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/367542\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=367542"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=367542"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=367542"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nhand, it raises nearly half of all federal revenues. On the other, it
\ndelivers a broad array of social benefits in the form of exemptions,
\ndeductions, and credits that reward people for government-favored
\nbehavior. If we look only at raising revenue, about three-fourths of
\npeople pay taxes. It’s that social welfare function that knocks so many
\npeople off the tax rolls.<\/p>\n
\nhas repeatedly used the income tax to encourage or subsidize specific
\nactivities.<\/b> We subsidize kids with the child credit, college attendance
\nwith multiple higher education credits, retirement with all sorts of
\ntax-favored savings plans, work with the earned income credit, and
\nchild care with, you guessed it, the childcare credit. And we’ve
\nretained most itemized deductions that subsidize homeownership, state
\nand local governments, and charitable giving.\n<\/p><\/blockquote>\n
\npolitical creation. Electeds, especially moderate and conservative
\npols, are reluctant to announce spending programs because it makes them
\nlook like Big Government Bogeymen. So they execute spending programs
\nthrough the tax system (because hey, “it’s not welfare spending, it’s a
\nchild tax credit!”). As regular as the tide, tax policy hawks
\nintermittently fret that up to 50 percent of taxpayers pay no net
\nfederal income taxes and that this is lamentable. But surely we can see
\nthat the reason they’re paying no taxes is that our aversion to new
\nspending programs has forced all sorts of actual spending programs to
\ngo through the tax system. <\/p>\n
\nso on. But I’m sympathetic to the argument that we have a civic
\nimbalance where up to 50 percent of the electorate is voting on federal
\nthat they won’t actually pay for, since local and state taxes stay
\nlocal and in-state and payroll taxes go to specific programs like
\nSocial Security and Medicare. If tax reformers want to correct this
\nimbalance, I think a broad-based consumption tax or VAT would be a
\nreasonable solution, not to mention a generally smart way to raise
\nfederal revenue.<\/p>\n
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