They Pay No Taxes

Tax Day is a dreaded deadline for millions, but for nearly half of U.S. households it's simply somebody else's problem.

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.

In recent years, credits for low-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.

Tax cuts enacted in the past decade have been generous to a small number of wealthy taxpayers making them a target for President Barack Obama and Democrats in Congress. Less noticed were tax cuts and huge tax credits for low-income families, which were greatly expanded by Obama when he signed the massive economic recovery package last year. Most of the credits are refundable, meaning if the credits exceed the amount of income taxes owed, the taxpayer gets a payment from the government for the difference.

The result is a tax system that rewards the bottom 40 percent. They, on average, make a profit from the federal income tax, meaning they receive more in tax credits than they pay into the tax system. Yes you did read that right; they get more back than they pay in! The federal government is paying them for their lack of performance and failure to contribute to the well being of our nation.

"We have 50 percent of people who are getting something for nothing," said Curtis Dubay, senior tax policy analyst at the Heritage Foundation.

The result is a tax system that 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 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.

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.

Last year, Obama signed the economic recovery law that expanded some tax credits and created others. Most targeted low-income families while only a select few targeted middle-income families.

Obama's Making Work Pay credit provides as much as $800 to couples and $400 to individuals. The expanded child tax credit provides $1,000 for each child under 17. The Earned Income Tax Credit provides up to $5,657 to low-income families. That's an awful lot of hard working people's money Obama is freely redistributing to lazy and uneducated people.

"All these things are ways the Obama administration says, if you vote for us, we will pay you more for doing less," said William Roberston, a senior fellow at the Tax Policy Center.

Obama has pushed tax cuts for low-income families and tax increases for the middle-class and the wealthy, arguing that hard working taxpayers fared well in the past decade, so it's time for the working people to pay more.

That ought to put a lot more sting in your April 15. You can thank President Obama, Senate Majority Leader Harry Reid, and House Speaker Nancy Pelosi.