off the charts
POLICY INSIGHT
BEYOND THE NUMBERS
BEYOND THE NUMBERS
Citing a new estimate that 51 percent of Americans owed no federal income tax in 2009, some are calling for raising taxes on low- and moderate-income people as part of tax reform. That would be a terrible mistake.
First, keep in mind that the 51 percent figure, from Congress’s Joint Tax Committee, was a temporary spike due to the recession (which reduced many people’s incomes) and a couple of temporary tax breaks in the 2009 Recovery Act that have now expired. In a more typical year, roughly 35-40 percent of households owe no federal income tax.
Before raising their taxes, let’s think about who these households are:
- Three-fifths of them, the Urban-Brookings Tax Policy Center says, are either elderly or have incomes less than the sum of the standard deduction and personal exemption — which total just $9,500 for an individual.
- The other two-fifths are mostly low-income workers with children who benefit from the Earned Income Tax Credit. They are working parents, some of whom have worked their way off of welfare, with incomes below twice the poverty line — or in many cases, below the poverty line.
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