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» Tax Day Becomes Pay Day:

Tax Day Becomes Pay Day

Posted by on April 18, 2010 at 9:01 am.

Like many other baby boomer Americans, I have paid hundreds of thousands of dollars in state, federal and payroll (social security) taxes. When I explain this to younger taxpayers their eyes glaze over and respond that they pay taxes too. After some investigating I was stunned as to what April 15 has become to lower and middle income taxpayers. It is no longer the dreaded day of paying what you have left in the bank to the government. It has now become a payday for many Americans. Last year 47 percent of Americans paid no federal income tax: http://money.cnn.com/2009/09/30/pf/taxes/who_pays_taxes/index.htm This number was unheard of in the 70s, 80s and 90s. The combination of higher personal exemptions, child tax credits, earned income credits and lower tax rates has led to this bonanza. Don’t get me wrong,  I think this is great to a point (that point being an income tax of zero) but it is also very unfair to singles, two income families with no children and higher income earners in general. Lets take a look at where we have come from in terms of income tax rates and exemption amounts.  In 1986 A married couple with 3 children under 16 and making 36,000 dollars paid 4,862 dollars in federal income tax. In 2009 that same couple would pay a NEGATIVE 3,381 dollars.   In other words the 2009 couple would pay no federal income tax and get a check from the IRS for 3,381 dollars.  Thats a difference of 8,243 dollars a year or 686 dollars a month. Incredible!   In 1995 a married couple with 3 children under 16 making 56,000 dollars a year paid 5,419 dollars in federal income tax. In 2009 that same couple paid -589 dollars in federal income tax. In other words they pay no federal income tax still get 589 dollars back. Wow!  A lot of this has to do with child tax credits and earned income credits: http://www.irs.gov/pub/irs-pdf/p596.pdf  It used to be that married couples with children carried an excess amount of the tax load. It now seems to be that singles and married couples with no children bear the load.  Let’s look further. In 2009 a taxpayer filing single with no children earning 56,000 paid 6,031 dollars in federal income tax. Contrast this to the couple with 3 children who paid no income tax and got a refund of 589 dollars.  Thats a difference of 6,620 dollars or about 551 dollars a month.   In 2009 a married couple making 56,000 a year paid 3,864 dollars in fedearal income tax.  Keep in mind that this does not include state income tax which also gives tax breaks to married with children. Also with programs such as food stamps and government paid healthcare the incentive for work is very much at risk here. It was very much at risk back in the 80s but for different reasons.  In the 80s people with an adjusted gross income of 32,000 were paying marginal tax rates of between 40 and 50 percent.  That is, for every extra 100 dollars earned, there was another 40 to 50 dollars in taxes.   In 2009 wage earners in the same bracket basically pay no taxes and derive other benefits for not working.  I firmly believe the income tax should be abolished. The revenues lost should not be replaced. We could easily make up for the lost revenue through budget cuts.  We have come a long way in eliminating the income tax for certain segments of our society but unfortunately others are still being punished for their hard work. The federal government has no business redistributing wealth through tax laws. This is just making the IRS another arm of the welfare state. With huge federal budget deficits, how long this can continue is anybody’s guess. But the fact that 47 percent of Americans  no longer pay income tax puts the rest of the taxpaying public in a dangerous position.  Non taxpayers are within a few percentage points of becoming the majority and when that happens lookout, because the taxpaying minority will really be in trouble. Since 1913 when it was created the federal income tax has made serfs and slaves of Americans: http://www.youtube.com/watch?v=7D2UzDIYLxA  It now has made another group of Americans dependent on it for income.  How long America can endure such an unfair system is up to the remaining taxpayers and how long they are willing to participate in this wealth redistribution scam called the income tax.  Hopefully it won’t be for  long.                                                           For more information on income tax rates and the income tax in general I am listing a couple of informative websites:   http://www.taxfoundation.org/publications/show/151.html   http://www.irs.gov/pub/irs-soi/02inpetr.pdf   http://www.irs.gov/pub/irs-soi/02inpetr.pdf  All of my tax calculations were derived using the standard deduction, personal exemptions, child tax credits, earned income credits and making work pay credits.

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