# 38% of households pay no federal income tax - bad for democracy?
**URL:** https://boards.straightdope.com/t/38-of-households-pay-no-federal-income-tax-bad-for-democracy/504944
**Category:** Great Debates
**Created:** [August 1, 2009, 1:32am UTC](https://boards.straightdope.com/t/38-of-households-pay-no-federal-income-tax-bad-for-democracy/504944 "2009-08-01T01:32:22Z")
**Posts on this page:** 20
**Page:** 1
### Author:  [@athelas](https://boards.straightdope.com/u/athelas)
#### Post date: [August 1, 2009, 1:32am UTC](https://boards.straightdope.com/t/38-of-households-pay-no-federal-income-tax-bad-for-democracy/504944/1 "2009-08-01T01:32:22Z")
[Cite.](http://www.taxpolicycenter.org/numbers/displayatab.cfm?Docid=1973&DocTypeID=7)
This trend does not look like it will reverse anytime soon; the premium to skill continues to increase which means that earnings will become more unequal over time. And the political ratchet of “progressive” policies appears to only go one way - new policies must cost the rich proportionally more or be branded “regressive.”
Do you believe that there is a deleterious effect on government spending policy when a large portion of the electorate can vote for more services and not have to pay for them? Who have no stake in restricting the size of the government and every reason to increase it? If you don’t think this is currently a problem, what taxless percentage of the electorate would be sufficient to convince you that it is?
In your response please note whether you already favor larger or smaller government, and (if larger) whether your answer would change if the percentage of government expenditure [continues to increase](http://www.marginalrevolution.com/marginalrevolution/2009/05/laissezfaire-eh.html) past your preferred level.
---
### Author:  [@DanBlather](https://boards.straightdope.com/u/DanBlather)
#### Post date: [August 1, 2009, 1:49am UTC](https://boards.straightdope.com/t/38-of-households-pay-no-federal-income-tax-bad-for-democracy/504944/2 "2009-08-01T01:49:32Z")
Kind of a leading question. Right now the marginal rates are low by historical standards, and the share of taxes paid by corporations vs individuals is also low.
You also assume that the poor/non-tax payers have influence in Congress which does not seem to be the case. In fact the rich have pretty much convinced the less well off that things like universal health care and the minimum wage are bad, and taxes on the rich are too high.
Given that, I think that ideally all citizens should pay some sort of tax. The best way to do that, in my opinion, is to address the income inequality. This can be done by raising the minimum wage and by addressing hiring of illegal immigrants who drive down wage scales.
---
### Author:  [@Trepa\_Mayfield](https://boards.straightdope.com/u/Trepa_Mayfield)
#### Post date: [August 1, 2009, 2:00am UTC](https://boards.straightdope.com/t/38-of-households-pay-no-federal-income-tax-bad-for-democracy/504944/3 "2009-08-01T02:00:31Z")
What about sales taxes? The poor still have to buy stuff.
---
### Author:  [@athelas](https://boards.straightdope.com/u/athelas)
#### Post date: [August 1, 2009, 2:03am UTC](https://boards.straightdope.com/t/38-of-households-pay-no-federal-income-tax-bad-for-democracy/504944/4 "2009-08-01T02:03:54Z")
National sales taxes aren’t as much of a political football as income taxes are. (Not to mention they’re “regressive!”)
---
### Author:  [@StaudtCJ](https://boards.straightdope.com/u/StaudtCJ)
#### Post date: [August 1, 2009, 2:04am UTC](https://boards.straightdope.com/t/38-of-households-pay-no-federal-income-tax-bad-for-democracy/504944/5 "2009-08-01T02:04:18Z")
Even those who don’t pay income tax still pay FICA and other taxes.
---
### Author:  [@AdmiralCrunch](https://boards.straightdope.com/u/AdmiralCrunch)
#### Post date: [August 1, 2009, 2:06am UTC](https://boards.straightdope.com/t/38-of-households-pay-no-federal-income-tax-bad-for-democracy/504944/6 "2009-08-01T02:06:31Z")
> [@athelas](#):
>
> [Cite.](http://www.taxpolicycenter.org/numbers/displayatab.cfm?Docid=1973&DocTypeID=7)
>
> This trend does not look like it will reverse anytime soon; the premium to skill continues to increase which means that earnings will become more unequal over time. And the political ratchet of “progressive” policies appears to only go one way - new policies must cost the rich proportionally more or be branded “regressive.”
>
> Do you believe that there is a deleterious effect on government spending policy when a large portion of the electorate can vote for more services and not have to pay for them? Who have no stake in restricting the size of the government and every reason to increase it? If you don’t think this is currently a problem, what taxless percentage of the electorate would be sufficient to convince you that it is?
>
> In your response please note whether you already favor larger or smaller government, and (if larger) whether your answer would change if the percentage of government expenditure [continues to increase](http://www.marginalrevolution.com/marginalrevolution/2009/05/laissezfaire-eh.html) past your preferred level.
Completely false dilemma. Income taxes are by no means the only method of taxation. According to [CBO estimates](http://www.cbo.gov/ftpdocs/100xx/doc10068/effective_tax_rates_2006.pdf)(Warning: PDF) the effective federal tax rate on the bottom two quintiles is 4.3 and 10.2 percent, respectively.
---
### Author:  [@Rigamarole](https://boards.straightdope.com/u/Rigamarole)
#### Post date: [August 1, 2009, 2:11am UTC](https://boards.straightdope.com/t/38-of-households-pay-no-federal-income-tax-bad-for-democracy/504944/7 "2009-08-01T02:11:41Z")
I’m kind of ignorant when it comes to taxes. How do so many people, especially with incomes over $100k, have no federal income tax liability? I understand there are many deductions such as mortgage interest, charitable donations, etc. but even so it would seem like they’d have to pay _some_ federal income tax.
Is it because they make income through capital gains? Other forms of “tax shelters”?
---
### Author:  [@Rand\_Rover](https://boards.straightdope.com/u/Rand_Rover)
#### Post date: [August 1, 2009, 2:13am UTC](https://boards.straightdope.com/t/38-of-households-pay-no-federal-income-tax-bad-for-democracy/504944/8 "2009-08-01T02:13:57Z")
> [@pedescribe](#):
>
> What about sales taxes? The poor still have to buy stuff.
> [@StaudtCJ](#):
>
> Even those who don’t pay income tax still pay FICA and other taxes.
But but but . . . the OP is talking about the U.S. federal income tax. It is therefore irrelevant whether and to what extent people that don’t pay any U.S. federal income tax do pay other taxes.
---
### Author:  [@Rand\_Rover](https://boards.straightdope.com/u/Rand_Rover)
#### Post date: [August 1, 2009, 2:16am UTC](https://boards.straightdope.com/t/38-of-households-pay-no-federal-income-tax-bad-for-democracy/504944/9 "2009-08-01T02:16:33Z")
> [@Rigamarole](#):
>
> I’m kind of ignorant when it comes to taxes. How do so many people, especially with incomes over $100k, have no federal income tax liability?
What do you mean by this? Do you believe that many people, some with incomes over $100k, pay no U.S. federal income tax year after year? Or only in one year? Or what?
---
### Author:  [@Rigamarole](https://boards.straightdope.com/u/Rigamarole)
#### Post date: [August 1, 2009, 3:02am UTC](https://boards.straightdope.com/t/38-of-households-pay-no-federal-income-tax-bad-for-democracy/504944/10 "2009-08-01T03:02:06Z")
> [@Rand\_Rover](#):
>
> What do you mean by this? Do you believe that many people, some with incomes over $100k, pay no U.S. federal income tax year after year? Or only in one year? Or what?
I don’t believe anything. I’m asking the question based on the link provided in the OP that shows 1.5% of households in the $100-200k bracket as having no income tax liability, 0.8% in the $200-500k bracket, 1.2% in the $500k-1 million bracket, and 0.6% of those earning over $1 million. I’m wondering exactly how they do it.
---
### Author:  [@foolsguinea](https://boards.straightdope.com/u/foolsguinea)
#### Post date: [August 1, 2009, 3:05am UTC](https://boards.straightdope.com/t/38-of-households-pay-no-federal-income-tax-bad-for-democracy/504944/11 "2009-08-01T03:05:58Z")
> [@athelas](#):
>
> This trend does not look like it will reverse anytime soon; the premium to skill continues to increase which means that earnings will become more unequal over time. And the political ratchet of “progressive” policies appears to only go one way - new policies must cost the rich proportionally more or be branded “regressive.”
I think “premium to skill” deserves scare quotes. The market is about negotiation. “Skill” is just a negotiating tool–real skill doesn’t even have to exist for a higher salary to be negotiated.
---
### Author:  [@Hellestal](https://boards.straightdope.com/u/Hellestal)
#### Post date: [August 1, 2009, 3:14am UTC](https://boards.straightdope.com/t/38-of-households-pay-no-federal-income-tax-bad-for-democracy/504944/12 "2009-08-01T03:14:41Z")
> [@athelas](#):
>
> 38% of households pay no federal income tax - bad for democracy?
>
> [Cite.](http://www.taxpolicycenter.org/numbers/displayatab.cfm?Docid=1973&DocTypeID=7)
>
> This trend does not look like it will reverse anytime soon; the premium to skill continues to increase which means that earnings will become more unequal over time. And the political ratchet of “progressive” policies appears to only go one way - new policies must cost the rich proportionally more or be branded “regressive.”
Regressive is a “definition”. This is “what the word means”. A sales tax is “branded” regressive with respect to income because it’s “accurate”. It happens to “fit the definition” that “economists” use. This is not, in my opinion, “difficult to understand”.
> [@athelas](#):
>
> Do you believe that there is a deleterious effect on government spending policy when a large portion of the electorate can vote for more services and not have to pay for them? Who have no stake in restricting the size of the government and every reason to increase it? If you don’t think this is currently a problem, what taxless percentage of the electorate would be sufficient to convince you that it is?
I think a deleterious effect is possible.
But you’d have to demonstrate that people believe they aren’t paying. There are federal payroll taxes, too, and although there’s a legal distinction between federal income and payroll taxes, at the end of the day, I doubt people particular care to note that their income is being taxed not as income tax but as FICA (with the note, too, that FICA maxes out). The distinction between the two is just politics and has essentially nothing to do with actual economic incidence of taxing wages. But if think you can demonstrate otherwise, I’ll consider your question again.
> [@athelas](#):
>
> In your response please note whether you already favor larger or smaller government, and (if larger) whether your answer would change if the percentage of government expenditure [continues to increase](http://www.marginalrevolution.com/marginalrevolution/2009/05/laissezfaire-eh.html) past your preferred level.
I favor better government.
At present, that means bigger government but that won’t always be true.
> [@foolsguinea](#):
>
> I think “premium to skill” deserves scare quotes. The market is about negotiation. “Skill” is just a negotiating tool–real skill doesn’t even have to exist for a higher salary to be negotiated.
No, it doesn’t, no more than regressive does. Returns to skill (related to human capital) has a precise definition. It’s a term of art.
Putting quotes around it once to call attention to its technical, jargonistic meaning is understandable. Continuing to do so is just silly.
---
### Author:  [@Rand\_Rover](https://boards.straightdope.com/u/Rand_Rover)
#### Post date: [August 1, 2009, 4:33am UTC](https://boards.straightdope.com/t/38-of-households-pay-no-federal-income-tax-bad-for-democracy/504944/13 "2009-08-01T04:33:36Z")
> [@Rigamarole](#):
>
> I don’t believe anything. I’m asking the question based on the link provided in the OP that shows 1.5% of households in the $100-200k bracket as having no income tax liability, 0.8% in the $200-500k bracket, 1.2% in the $500k-1 million bracket, and 0.6% of those earning over $1 million. I’m wondering exactly how they do it.
Ah, sorry. I did not RTFA.
Those tables are based on only a single tax year. The “brackets” in the table are just different “cash income levels.” There’s a link (that I didn’t read) that explains what “cash income” is.
I would think that what is going on here is that those that had a large cash income but didn’t pay any tax didn’t have any taxable income for the single tax year that the chart covers.
---
### Author:  [@magellan01](https://boards.straightdope.com/u/magellan01)
#### Post date: [August 1, 2009, 5:01am UTC](https://boards.straightdope.com/t/38-of-households-pay-no-federal-income-tax-bad-for-democracy/504944/14 "2009-08-01T05:01:48Z")
I think every able-bodied, able-minded person should pay income tax. Not only does it make everyone “part of the system”, but it acts as a check on spending and raising taxes. That is why the left want fewer people to feel the income tax bite. When you don’t feel the bite you’re more apt to vote for things that cost a lot. Hell, it’s free to you. and the more goodies the government can give to more people, the more likely they are to vote to keep them.
I’d give low extremely low income people a way to “pay” without $. Let them help paint the outside of the school, clean up the parks and beaches, wax the gym floor, get classrooms ready for the new semester, etc.
---
### Author:  [@Snowboarder\_Bo](https://boards.straightdope.com/u/Snowboarder_Bo)
#### Post date: [August 1, 2009, 5:43am UTC](https://boards.straightdope.com/t/38-of-households-pay-no-federal-income-tax-bad-for-democracy/504944/15 "2009-08-01T05:43:26Z")
> [@magellan01](#):
>
> I think every able-bodied, able-minded person should pay income tax. Not only does it make everyone “part of the system”, but it acts as a check on spending and raising taxes. That is why the left want fewer people to feel the income tax bite. When you don’t feel the bite you’re more apt to vote for things that cost a lot. Hell, it’s free to you. and the more goodies the government can give to more people, the more likely they are to vote to keep them.
>
> I’d give low extremely low income people a way to “pay” without $. Let them help paint the outside of the school, clean up the parks and beaches, wax the gym floor, get classrooms ready for the new semester, etc.
Yeah, labor for the state! That’s the way to prosperity! And to make sure they paint _real good_ we could have another batch of [del]slaves[/del] taxpayers hold 'em at gunpoint until the job is done!
That’ll instill the proper patriotic fervor in [del]slaves[/del] [del]taxpayers[/del] citizens!
---
### Author:  [@Rigamarole](https://boards.straightdope.com/u/Rigamarole)
#### Post date: [August 1, 2009, 6:04am UTC](https://boards.straightdope.com/t/38-of-households-pay-no-federal-income-tax-bad-for-democracy/504944/16 "2009-08-01T06:04:52Z")
> [@Rand\_Rover](#):
>
> Ah, sorry. I did not RTFA.
>
> Those tables are based on only a single tax year. The “brackets” in the table are just different “cash income levels.” There’s a link (that I didn’t read) that explains what “cash income” is.
>
> I would think that what is going on here is that those that had a large cash income but didn’t pay any tax didn’t have any taxable income for the single tax year that the chart covers.
I see, I missed the little link in the fine print explaining cash income.
> [@](#):
>
> Cash income includes wages and salaries, employee contribution to tax-deferred retirement savings plans, business income or loss, farm income or loss, Schedule E income, interest income, taxable dividends, realized net capital gains, social security benefits received, unemployment compensation, energy assistance, Temporary Assistance for Needy Families (TANF), worker’s compensation, veteran’s benefits, supplemental security income, child support, disability benefits, taxable IRA distributions, total pension income, alimony received, and other income including foreign earned income. Cash income also includes imputed corporate income tax liability and the employer’s share of payroll taxes. This puts the income measure on a pretax basis.
The list does say it includes capital gains and taxable dividends, so I am guessing these people are ones whose income source is coming from that and maybe something such as foreign earned income.
---
### Author:  [@brickbacon](https://boards.straightdope.com/u/brickbacon)
#### Post date: [August 1, 2009, 6:59am UTC](https://boards.straightdope.com/t/38-of-households-pay-no-federal-income-tax-bad-for-democracy/504944/17 "2009-08-01T06:59:43Z")
> [@StaudtCJ](#):
>
> Even those who don’t pay income tax still pay FICA and other taxes.
Exactly. This [study](http://ase.tufts.edu/gdae/Pubs/wp/03-10-Tax_Incidence.pdf), from 2003, states the following:
> [@](#):
>
> This paper measures the progressiveness (or regressiveness) of each major element of the U.S. tax system, as well as of the tax system as a whole. While the tax system contains a mixture of progressive and regressive taxes, **the overall system is slightly progressive.**
>
> Data on the distributional implications of the recent Bush tax cuts indicates a decline in the progressivity of the federal income tax. When assessed in light of all taxes in the U.S., tax cuts to be phased- in under current legislation threaten to reduce or even eliminate any progressiveness from the U.S. tax system. This possibility is particularly likely if tax cuts scheduled for sunset are renewed. Thus, legislators and commentators need to be aware that even if the federal income tax remains quite progressive, the overall U.S. tax system is tending towards a system that falls on each household in approximate proportion to income. The current trend towards a less progressive federal income tax and more regressive state taxes suggests that in the foreseeable future the United States could have a tax system that is regressive overall.
Others say that when you account for all deductions, the system may even be slight regressive- particularly when the current tax trends are taken into consideration. Either way, it seems as though most people are making a roughly proportional tax contribution.
Since rich people tend to have far more control over policy, and access to government officials, I think it balances out.
---
### Author:  [@magellan01](https://boards.straightdope.com/u/magellan01)
#### Post date: [August 1, 2009, 7:07am UTC](https://boards.straightdope.com/t/38-of-households-pay-no-federal-income-tax-bad-for-democracy/504944/18 "2009-08-01T07:07:10Z")
> [@Snowboarder\_Bo](#):
>
> Yeah, labor for the state! That’s the way to prosperity! And to make sure they paint _real good_ we could have another batch of [del]slaves[/del] taxpayers hold 'em at gunpoint until the job is done!
>
> That’ll instill the proper patriotic fervor in [del]slaves[/del] [del]taxpayers[/del] citizens!
So, now you’re going to follow me around to just piss? How about commenting on the OP/ You know, in the thread you found interesting enough to open and spend time with? Or did you just see my name as the latest contributor and come in here to try to get some for revenge for the bitch-slapping you got in our last exchange?
But let me help you: why is it okay for some to work to contribute to the common good and others not?
---
### Author:  [@Hilarity\_N.Suze](https://boards.straightdope.com/u/Hilarity_N.Suze)
#### Post date: [August 1, 2009, 8:03am UTC](https://boards.straightdope.com/t/38-of-households-pay-no-federal-income-tax-bad-for-democracy/504944/19 "2009-08-01T08:03:58Z")
> [@magellan01](#):
>
> But let me help you: why is it okay for some to work to contribute to the common good and others not?
People who work for the common good and choose not to get paid for this work are called volunteers.
People who are told they _must_ work for the common good and not get paid are not volunteers, they are slaves.
Unless they are prisoners picking up roadside trash. Well, maybe even then.
What is wrong with paying people to wax the gym floor, paint, etc.? Why are you taking money out of the pockets of those who earn their living this way?
---
### Author:  [@magellan01](https://boards.straightdope.com/u/magellan01)
#### Post date: [August 1, 2009, 1:42pm UTC](https://boards.straightdope.com/t/38-of-households-pay-no-federal-income-tax-bad-for-democracy/504944/20 "2009-08-01T13:42:54Z")
> [@Hilarity\_N.Suze](#):
>
> People who work for the common good and choose not to get paid for this work are called volunteers.
>
> People who are told they _must_ work for the common good and not get paid are not volunteers, they are slaves.
In that case, everyone who pays income taxes is a slave of sorts. If you’re in the 33% tax bracket, every third day you work you are a slave. Now I don’t view paying taxes as slavery, and I’m not against them. But I do think everyone should contribute. I see no reason why they shouldn’t. You certainly haven’t provided one.
> [@Hilarity\_N.Suze](#):
>
> What is wrong with paying people to wax the gym floor, paint, etc.? Why are you taking money out of the pockets of those who earn their living this way?
Any job the government creates should be out of necessity. If it turns out that through someone paying their tax through labor that municipalities never need to pay for a school to be painted again, that’s a good thing. That’s more money for books, teachers, etc.
[Next page](https://boards.straightdope.com/t/38-of-households-pay-no-federal-income-tax-bad-for-democracy/504944.md?page=2)