Every year around this time, millions of Americans fill out a form 1040 – hoping they don’t have to write a check to Uncle Sam. Millions more know they will be getting a refund (which is normally a return of some portion of their money that was withheld in excess of what the IRS thinks they were owed) while a smaller number will receive a “refund” in excess of the amount withheld by the IRS. The Tax Policy Center reports that roughly 46% of households filing with the IRS will “pay no income tax.” While this enrages many people who will claim that those who do pay are “supporting” those who don’t, I see things a little differently.
The Americans paying income tax are not “supporting” anyone. The Grace Commission in 1984 issued a report that stated in part, “all individual income tax revenues are gone before one nickel is spent on the services taxpayers expect from their Government.”
Certainly some of the revenue from the IRS is redistributed to those that receive a more from the IRS than they had forcibly withheld from them, though that could hardly be interpreted as “supporting” the ones that don’t “pay.”
Every time I hear a report like this, I’m reminded of the Whitey Harrell trial. Mr. Harrell was charged with not filing an Illinois State tax return and was acquitted by the jury.
Marcella Brooks, the juror that was vocal in getting the acquittal, recounts in “America: Freedom to Fascism” that the other members of the jury said “but he’ll get away with it.” Mr. Harrell was acquitted because “the IRS couldn’t show us the law.” Millions of Americans are like the members of that jury – they’re not really upset that others aren’t paying; they’re upset that they are!
The Tax Policy Center explains that even though 76 million households don’t pay federal income tax, they still pay tax. Most will pay payroll taxes, state and local income and sales taxes as well as excise taxes on gas, tobacco, cigarettes and alcohol.
The TPC report explains many of the ways people avoid federal income tax and that is a very important part of the equation.
“For 50 percent of those that don’t pay federal income taxes, standard deductions and personal exemptions are enough to counteract their taxable earnings… 22 percent are senior citizens… 15 percent are working families, many of them low-income, who qualify for one or all of the Earned Income tax credit, the Child tax credit, the Child and Dependent Care tax credit… and the remaining 13 percent are a mix of mostly higher-income individuals with enough itemized deductions for items like mortgage interest, health payments, or charitable contributions, education tax credits, or tax exempt interest to zero out their income taxes.”
There are also tax credits for buying a “green” automobile, making “green” improvements to your house and other credits and deductions.
Congress uses these tax deductions and credits as a way to pander to certain groups in exchange for votes and/or campaign contributions, though simply eliminating these deductions and credits will not solve anything. The only solution is to eliminate the IRS, abolish the Federal Reserve and abolish all unconstitutional spending.
Then, and only then, 100% of American households will pay no federal income tax!