WHO DOESN'T PAY INCOME TAXES

We hear conservatives and liberals alike complain about how many people don’t pay income taxes. Those numbers are frequently inflated, but a New York Times article, written by Bruce Bartlett (who held senior policy roles in the Reagan and George H.W. Bush administrations and served on the staffs of Representative Jack Kemp and Ron Paul), helps set some records straight with up-to-date information.

The actual percentage of non-payers for 2011 is 46.4 percent (from the Tax Policy Center). Mr. Bartlett points out that the growth of the percentage of non-payers is “largely a result of Republican tax policies.” The earned-income tax credit (originated by Ford and expanded by both Reagan and Bush I, in lieu of raising minimum wages) was the main reason for lower incomes being largely exempted. Because of that, the percentage of non-payers rose from 19.2% to 25.2%.

In the 1990s George W. Bush’s GOP administration added a large child credit to the tax code. The percentage of non-tax payers jumped to 36.3%, as a result.

In 2011, 78,000 individuals making incomes of $211,000-$533,000 or more paid not one cent of income taxes. There are additionally 24,000 with incomes of $533,000-$2.2 Million that pay zero. Why? Bruce Bartlett says it’s because capital gains (taxed at only 15%) are a huge percentage of their incomes or they may have invested some or all of their wealth in tax-free municipal bonds.

These are the “Welfare Queens” who prey on tax loopholes to fill their own pockets.

A large percentage of those who paid no income taxes earned less than $16,812 in 2010. Many of them are part-time workers, youth working their way through school, unskilled laborers, or seniors trying to make ends meet.

Thomas Jefferson wrote James Madison in 1785, "Another means of silently lessening the inequality of property is to exempt all from taxation below a certain point, and to tax the higher portions of property in geometrical progression as they rise.”

This is far from a new concept. It worked for a very long time during America’s most prosperous years.