Per the US Census, all US households divide into five groups of equal size along these income lines for 2009:
1) $0 to $20,453
2) $20,454 to $38,550
3) $38,551 to $61, 801
4) $61,802 to $100,000
5) over $100,000 (the top 5% make in excess of $180,000).
Current tax brackets are concentrated on the fifth group, the over $100,000 set, so that the top four of the six brackets affect the top 20% of earners in the population the most:
10% for adjusted gross incomes $0 to $16,750
15% on AGIs to $68,000
25% on AGIs to $137,300
28% on AGIs to $209,250
33% on AGIs to $373,650
35% on AGIs above $373,650.
The result is that 60% of the country is responsible for very little tax revenue, and the expansion of various credits like the Child Tax Credit and the Earned Income Credit have meant that an increasingly large percentage of the population is paying no tax at all.
For the 2008 tax year the Tax Foundation reported here that 36% of filers paid no tax at all:
For the 2008 tax year the Tax Foundation reported here that 36% of filers paid no tax at all:
Nonpaying status used to be a sure sign of poverty or near-poverty, but Congress and the President have changed the tax laws to pull much of the middle class into the growing pool of nonpayers. The income level at which a typical family of four will owe no income taxes has risen rapidly, now topping $51,000.
As a result, recently released IRS data for the 2008 tax year show that a record 51.6 million filers had no income tax obligation. That means more than 36 percent of all Americans who filed a tax return for 2008 were nonpayers, raising serious doubts about the ability of the income tax system to continue funding the federal government's ballooning expenditures.
The situation worsened dramatically in 2009, to 47%, according to the Tax Policy Center in this AP story:
About 47 percent will pay no federal income taxes at all for 2009. Either their incomes were too low, or they qualified for enough credits, deductions and exemptions to eliminate their liability. That's according to projections by the Tax Policy Center, a Washington research organization. ...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.
"We have 50 percent of people who are getting something for nothing," said Curtis Dubay, senior tax policy analyst at the Heritage Foundation. ...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.
In other words, the tax code under George Bush and the Republicans in 2001 and 2003 became an instrument of liberal social policy, providing massive social spending on America's middle and lower classes. Combined with George Bush's massive hand out to the elderly in the form of drugs for seniors you now understand why liberals hate George Bush so much: because he out-liberaled the liberals.
And don't expect to hear about it from Rush Limbaugh. He thinks there isn't anyone in the country who is undertaxed.
If there were really any conservatives left in the country, they'd be calling for a complete end to these subsidies because they represent government spending which we cannot afford, and for a broader tax base which embodied every American's patriotic duty to contribute to the general welfare.
A real conservative would equate exempting low incomes from taxation with the practice of exempting high incomes from taxation. The "refund" checks which "the poor" receive from the government when they file their taxes are no different from the exemption the rich receive when payroll taxes are not collected on income above $106,500. The former are justified as offsets of the payroll taxes the poor pay, the latter as exemptions from contributions the rich would never live to recoup. Everyone in a narrower and narrower middle pays and pays those taxes, year in and year out, to benefit the poor and the elderly. It is unsustainable.
