In general, given my understanding that taxation is theft, or at least radical extortion, I am pleased when people escape the clutches of the tax official. But the news that the majority of Americans will not owe personal income tax in 2020 and will not pay personal income tax in 2021 is a two-fold concern: First, that tax obligations have gone for so many because the economy was so brutal during the pandemic was hit; second, that the result is a situation in which a minority of the population takes account of the policies of the majority elected politicians.
“The Tax Policy Center estimates that nearly 107 million households, or approximately 61 percent, did not owe income tax or even received tax credits from the government last year,” said Howard Gleckman, senior fellow at the Tax Policy Center. noticed last week. “The increase is likely to be temporary, however. The proportion of non-payers will drop to around 102 million or 57 percent this year.”
In the last few years before the pandemic, the percentage of non-income tax returns on the Tax Policy Center’s numbers was closer to 44 percent, although it has trended up over time.
“The percentage of non-income applicants has generally increased compared to nearly 40 years ago,” said the National Taxpayers Union Foundation reported in 2018. “This trend is indicative of a progressive income tax law where high earners pay a larger share of taxes, while low earners are generally shielded from significant income tax liabilities.”
As the National Taxpayers Union Foundation points out, those who are not subject to income tax are generally less wealthy, and it’s no surprise their numbers skyrocketed in 2020 when the economy weakened during a period of pandemic worries, as did both led to voluntary social distancing and, more worryingly, imperative restrictions on economic activity.
“US states with short or no lockdown measures (e.g. South Dakota and Nebraska) have suffered the least economic damage,” Peter C. Earle and Amelia Janaskie closed for the American Institute for Economic Research. “And expected to be in the industries most sensitive to lockdowns – small businesses in general, which are where the most jobs are created; Service industries that now dominate the US economy; and, more generally, any business with jobs that do not readily convert to work – from home – the result is wanton destruction and loss. “
This is essentially what Gleckman found out for the Tax Policy Center. He observed that in the depths of the pandemic, 20 million mostly low-wage workers lost their jobs. In addition, stimulus packages by net taxpayers pushed some households out of their income tax liability.
No matter how annoyed we are about taxes, making people too poor to pay is not a constructive way to reduce the tax burden. In this respect, the news that the proportion of income taxpayers will increase in the future is not good because they are back in the clutches of the tax man, but because they are wealthy enough again to draw his attention to themselves.
The Tax Policy Center predicts the percentage of households not paying income tax will decrease to 42 percent in 2022 and stay there through the mid-2020s, “assuming the economy continues to recover and several temporary tax breaks like planned to expire ”, as Gleckman puts it. However, he admits that these benefits may be not expire due to significant political pressure to maintain it. Among those burdens is the fact that the existing guidelines mean that this year no households with incomes less than $ 28,000 will pay federal income tax, and 43 percent of middle-income households will not pay federal income tax – and there is Electorate that retains at least a portion of preferential treatment.
That points to the second concern among the rising ranks of those who do not owe income taxes. This is a situation in which many potential voters will vote at the polls among politicians, but do not have to pay full price for the resulting measures and programs. If the proportion of non-payers remains above 50 percent, this would be left to a minority of the population who have been voted out of office. The people paying the bill would find themselves in a very uncomfortable position – they would essentially lead dairy cow lives for the rest of society – if it went on for any length of time.
“Aside from the revenue impact of 58 million Americans not paying income taxes, economists are concerned about the social and political implications of having so many people cut off the state costs – a phenomenon known as the fiscal illusion,” says Will Freeland, William McBride, and Ed Gerrish warned in a 2012 report for the tax foundation. “The concern is that if people perceive government costs to be cheaper than they really are, they will demand more and more government benefits because they either don’t feel the costs directly or believe that others are paying the costs.”
However, as the Tax Policy Center points out, the situation is short-term and the percentage of households not paying income tax is likely to return to pre-pandemic levels soon – provided the economy continues to improve and “temporary” measures actually turn out to be as temporary. Plus, most people paid even during the pandemic some Form of taxes in the form of payroll taxes, state income taxes, property taxes, sales taxes, and the like. Completely escaping the government’s seemingly insatiable appetite for human wealth is beyond the capabilities of most of us.
But the National Taxpayers Union Foundation’s point that “the percentage of non-income applicants has generally increased from nearly 40 years ago” is worth remembering in the future, even as we (maybe) too economic Conditions and tax policies return before the pandemic. Pandemic biases aside, the cost of policies and programs implemented by all electoral officials is falling on a shrinking proportion of the population.
Overall, revelations about who pays income taxes right now and why not are a reminder that governments have an unprecedented ability to harm economies and impoverish people – especially those who are most vulnerable and have the fewest resources to resort to. Nothing, it seems, kills jobs and wealth like the efforts of officials to “help” with violent measures during a crisis.
Those of us who oppose taxation should do our best to ensure that reforms and government revenue cuts are widespread among the population. This will help avoid separating those who take advantage of government action from those who pay the bill.