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Taxpayers and Taxtakers

That’s certainly one way of looking at the competing tax plans of the two major-party candidates, Senator John McCain (R) and Senator Barack Obama (D). In fact, a new analysis from the Tax Foundation, released on Friday, reports that “both candidates tax plans will reduce millions of taxpayers’ liability to zero (or less).” Specifically, the Tax Foundations writes:

“According to the most recent IRS statistics for 2006, some 45.6 million tax filers—one-third of all filers—have no tax liability after taking their credits and deductions. For good or ill, this is a dramatic 57 percent increase since 2000 in the number of Americans who pay no personal income taxes.

“Tax Foundation estimates show that if all of the Obama tax provisions were enacted in 2009, the number of these "nonpayers" would rise by about 16 million, to 63 million overall. If all of the McCain tax proposals were enacted in 2009, the number of nonpayers would rise by about 15 million, to a total of 62 million overall.”

The Tax Foundation points out that “major structural tax changes enacted during the 1980s contributed greatly to the doubling of nonpayers. Perhaps the most significant was indexing the tax brackets in 1985 to prevent inflation from pushing people into higher tax brackets. Also, the Tax Reform Act of 1986 nearly doubled the personal exemption and replaced the zero-bracket with the basic standard deduction for nonitemizers.” To see just how many tax filers now owe zero income tax, consider the following chart from the study:

The Tax Foundation concludes their analysis with some very thought-provoking comments: 

“Over the past two decades, lawmakers have increasingly turned to the tax system rather than direct spending programs to funnel money to targeted groups of Americans, furthering some social or political goal. As a result, millions of Americans have been effectively removed from the income tax payment system while the tax code has been made more complicated to comply with and more difficult to administer. The tax plans of both the presidential candidates would exacerbate this situation greatly.

“It is time for a serious public discussion of whether it is desirable to have so many Americans disconnected from the cost of government and what the consequences are of using the tax system as a vehicle for social policy.” (emphasis added)

The entire analysis is worth reading because it deals with issues other than "zero liability" tax filers, e.g., the undersireable effects of the credits Congress increasingly uses :instead of government spending programs to funnel money to groups of people them want to reward."

Oh, one more thing. About that "dramatic 57 percent increase since 2000 in the number of Americans who pay no personal income taxes." Can some liberal or progressive explain why President Bush isn't given far more credit for helping the poor? Compare, for example, that 57% change versus the change from 1992 to 2000.


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