Who Should Pay Their Fair Share – the 51% Who Pay Nothing?



Life is never fair, and perhaps it is a good thing for most of us that it is not. ~ Oscar Wilde

People are getting wrapped up in the debt ceiling debate and the confusing and unfair tax system, which could straighten out a lot of our problems, is forgotten. The President keeps talking about corporate jet owners needing to pay more. Corporate jets are an industry just barely getting back on its feet.

So who is not paying their fair share? Mostly it’s the middle incomes. Shouldn’t we have some “shared sacrifice?” Why is the shared sacrifice shared only with 49% of the people? Even if people cannot pay a lot, they should pay something – they use all the same services. I don’t know about you, but I don’t feel I’m getting a heck of a lot that I want for my taxes. Let’s focus on rights the wrong that is the IRS>

“Fifty-one percent — that is, a majority of American households — paid no income tax in 2009. Zero. Zip. Nada.” John Cornyn said on the Senate floor this past July 7th.

“Let’s talk about federal tax reform,”  Cornyn said, referring to suggestions that a restructuring of the tax code could emerge from bipartisan negotiations over extending the federal government’s ability to borrow money. “There has been a lot of discussion about that, where we want to take the tax code with all of its multiple provisions and get it on the table and take a look at it to make sure it is, in my view, flatter, fairer and simpler.

“But right now, the fact (is) that according to the Committee on Joint Taxation, 51 percent — that is, a majority of American households — paid no income tax in 2009. Zero. Zip. Nada. … Actually, to show how out of whack things have gotten, 30 percent of American households actually made money from the tax system by way of refundable tax credits — the Earned Income Tax Credit, among others. So 51 percent of American households paid no income tax in 2009, but 30 percent actually made money under the current system.”

So who is not paying their fair share? The wealthy or all the rest of us?

As Cornyn noted, his statistics come from a document produced by the Joint Committee on Taxation, a respected bipartisan committee of Congress. The JCT found that for tax year 2009, roughly 22 % of “tax units” (not exactly “households,” but we’ll give Cornyn a pass on the terminology) ended up without any tax liability. Another 30 %  got money back from the government, through mechanisms such as the Earned Income Tax Credit, a longstanding policy that encourages low-income Americans to work by refunding money through the tax code. By contrast, JCT found just 49 percent of Americans owed anything to the government.

How did we get to the point where most Americans don’t pay federal income taxes? The main reason is that the U.S. employs the tax system not just to collect funds but to distribute them as well.

Bob Williams, a tax policy specialist at the nonpartisan Urban Institute-Brookings Institution Tax Policy Center, said this is largely carried out through popular tax breaks, which are sometimes called “tax expenditures.”

“There are lots and lots of them,” he said. “We estimate they total more than a trillion dollars a year in reduced taxes, and in fact the bulk of those go to the top end of the income distribution.”

However, because high earners have so much income liability, the breaks they get still don’t lower their taxes to zero. By contrast, popular lower- and middle-income breaks such as child credits and mortgage interest deductions do get a big share of the population off the hook.

This chart is lacking in that it does not reflect payments made to people. The Stimulus arranged for people to receive (welfare) unearned “tax credits”

While the rich benefit more because they earn and  pay more, is that a good reason to not make half the workers pay nothing?


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