NCPA - National Center for Policy Analysis

JCT Report: Tax Credits Increase Ranks Of Nontaxpayers, Burden On High Earners

December 16, 1998

The number of Americans who will pay no income tax for 1998 is climbing, thanks largely to the $400 per child tax credit. Moreover, taxpayers with higher incomes will shoulder an increasing share of the nation's income tax structure, reports congress's Joint Committee on Taxation.

  • Nearly 48 million Americans will owe no income taxes for this year -- up from 46 million last year.
  • Most of them make less than $20,000 a year.
  • People making over $100,000 a year will pay 62 percent of all income taxes -- up from 56 percent the year before.
  • Those earning more than $40,000 will account for 95.5 percent of income taxes.

Less than 1 percent of people earning more than $75,000 pay no taxes. The average tax liability for those making between $100,000 and $200,000 is $19,688, the report said.

The 47.8 million who pay no income taxes represent more than one- third of the people required to file tax returns. For families with one or two children, the $400 credit can reduce income taxes to zero but not trigger a refund. But for families with three or more children, a portion of the total credit can result in a refund.

Sources: "Estimates of Federal Tax Expenditures for Fiscal Years 1999-2003" December 14, 1998, Joint Committee on Taxation, U.S. Congress, Washington D.C.; Associated Press, "Millions of Americans Will Pay No Taxes," Washington Times, December 16, 1998.


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