NCPA - National Center for Policy Analysis


April 9, 2010

About 47 percent of U.S. households will pay no federal income taxes for 2009.  Either their incomes were too low or they qualified for enough credits, deductions and exemptions to eliminate their liability. That is according to projections by the Tax Policy Center, a Washington research organization. 

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 LLP: 

  • The tax system 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. 

The federal income tax is the government's largest source of revenue, raising more than $900 billion -- or a little less than half of all government receipts -- in the budget year that ended last Sept. 30.  But with deductions and credits, especially for families with children, there have long been people who don't pay it, mainly lower-income families, says Yahoo Finance: 

  • The number of households that don't pay federal income taxes increased substantially in 2008, when the poor economy reduced incomes and Congress cut taxes in an attempt to help recovery.
  • In 2007, about 38 percent of households paid no federal income tax, a figure that jumped to 49 percent in 2008, according to estimates by the Tax Policy Center. 

Source: Stephen Ohlemacher, "Nearly half of US households escape fed income tax," Yahoo Finance, April 7, 2010. 


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