NCPA - National Center for Policy Analysis

Tax Rolls Shrinking

June 19, 2003

President Bush's two major tax cuts in 2001 and 2003 have removed nearly 4 million taxpayers from the income tax rolls, so that nearly 30 percent of all income-tax filers pay nothing.

  • Thanks to the 2001 $1.35 trillion tax cut and last month's $350 billion tax cut, 39.6 million families will have no income tax liability in 2003, according to numbers by the Tax Foundation and Citizens for Tax Justice.
  • Such families owe nothing because they don't earn enough to pay income taxes or because they will have more credits from government programs than they owe in income taxes.
  • The figures apply even before Congress acts on a bill to provide 6.5 million families, who are already off the tax rolls, with up to another $400 per child, bringing the total per-child tax credit to $1,000.
  • The bill would extend the full $1,000-per-child credit to married couples making up to $150,000, eliminating the eligibility "marriage penalty."

The number of families that have fallen off the tax rolls has more than doubled since 1980, when 18.6 million filers -- about 20 percent of those filing -- had no liability, according to numbers from the Tax Foundation.

"Every bill since at least 1986 has taken a few more million off the rolls," said Chris Edwards, director of fiscal policy at the Cato Institute.

The threshold for filers who have no tax liability has also increased to where a family of four earning nearly $40,000 might well pay no income taxes, depending on their particular situation.

Source: Stephen Dinan, "Bush's tax cuts add up to zero," Washington Times, June 19, 2003.


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