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How Many Tax Filers Do Not Pay Federal Income Taxes?

Economists at the non-partisan Tax Foundation have released a new “fact sheet” (No. 202, Surge of ‘Nonpayers’ Will be Part of Bush Tax Legacy) in which they “estimate that roughly 46.6 million” (32.6% of 143 million) “tax returns faced a zero or negative tax liability.” The Tax Foundation goes on to explain:

“These are the so-called nonpayers, people whose exemptions, deductions and credits wiped out any tax that would have been due. As a result, every dollar that was withheld from their paychecks during the year was refunded. In about half the cases, substantial additional money was "refunded" to the tax filer, although that portion is classified as a government expenditure since it is actually welfare spending, not a tax refund.” (emphasis added)

After the number of “nonpayers” peaked at 28.0% in 1950, the number dropped to 21.8% in 1953. The percentage of returns with no liability was then “fairly low in the 1960s and again in the early 1980s.” During the 1990’s, the rate steadily rose from 21.0% in 1990 to 25.6% in 1999.

Since 2001, however, the number of “nonpayers” jumped from 25.2% in 2000 and peaked at 33% in 2000 before dropping slightly to 32.6% in 2007. Fact Sheet 202 includes the percentage of tax returns with no tax liability for each year since 1950. Keep it in mind whenever liberals claim that the Bush tax cuts "went to the rich."


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