Most people fantasize about supermodels (at least most guys, I have no clue about females). But I’m different. I dream about a world with limited government, sort of like what America’s Founding Fathers had in mind.
One of the best things about this fantasy world is that we would not need an income tax. Indeed, with the exception of brief periods during the Civil War and 1894-1895, America did just fine without an income tax all the way ’til 1913.
But even though I like the idea of a society where none of us is burdened by an income tax, it does not automatically follow that I’m happy about the growing number of people that are now exempted from the tax.
My concern revolves around the fact that if government is “free” for a growing number of people, that may lead them to support policies that make government even bigger. More generally, this could be another step toward becoming a failed state like Greece, with too many people riding in the wagon and not enough people pulling the wagon.
Here’s a chart, showing the most-recent breakdown of taxpayers vs. non-taxpayers, from the Ways & Means Committee.
[…] is a measure of dependency. What’s really captured by this variable, given the way the tax code doesn’t tax low-income people and over-taxes high-income people, is the degree to which states have lots of rich people or poor […]
[…] I will confess to occasionally having quirky libertarian fantasies, one of which does involve […]
[…] nearly half of all households are no longer are subject to the income tax. Indeed, the system is actually a revenue generator for some households since the EITC wage subsidy […]
[…] nearly half of all households are no longer are subject to the income tax. Indeed, the system is actually a revenue generator for some households since the EITC wage subsidy […]
[…] Though I paradoxically confess that I’m troubled that this no-income-tax fantasy is partially happening. […]
[…] tax rolls. And since the U.S. thankfully does not have a value-added tax, lower-income people are largely protected from […]
[…] a measure of dependency. What’s really captured by this variable, given the way the tax code doesn’t tax low-income people and over-taxes high-income people, is the degree to which state have lots of rich people or poor […]
[…] combined standard deduction and personal exemptions in the current tax system. Indeed, because of my concerns about people viewing government as being free, I actually think the amount of tax-free income people would be able to earn is too large. So Mr. […]
[…] is from the middle of last decade, so the numbers are probably different today. But since we’ve taken more people off the tax rolls in the past 10 years in America while also increasing tax rates on upper-income households, I would […]
[…] is from the middle of last decade, so the numbers are probably different today. But since we’ve taken more people off the tax rolls in the past 10 years in America while also increasing tax rates on upper-income households, I would […]
[…] from the middle of last decade, so the numbers are probably different today. But since we’ve taken more people off the tax rolls in the past 10 years in America while also increasing tax rates on upper-income households, I would […]
[…] is an appealing argument. While Mitt Romney was wrong in his assertion that 47 percent of the population was part of the […]
[…] a downside to creating more […]
[…] It’s good for people not to have to pay tax, of course, but we already have a system where almost half of all households are exempt from the income tax. So the concern is that we have a growing share of the population that perceives government as a […]
[…] It’s good for people not to have to pay tax, of course, but we already have a system where almost half of all households are exempt from the income tax. So the concern is that we have a growing share of the population that perceives government as a […]
[…] It’s good for people not to have to pay tax, of course, but we already have a system where almost half of all households are exempt from the income tax. So the concern is that we have a growing share of the population that perceives government as a […]
[…] I shared a presidential debate fantasy in 2012 and a Texas sovereignty fantasy in 2011, and I even shared a fantasy two years ago involving about 50 percent of the population. […]
[…] I’ve already posted on Obama’s class-warfare approach to tax policy, and I’ve also posted about the pitfalls of a tax system that exempts 50 percent of the population. […]
[…] I’ve already posted on Obama’s class-warfare approach to tax policy, and I’ve also posted about the pitfalls of a tax system that exempts 50 percent of the population. […]
[…] I’ve already posted on Obama’s class-warfare approach to tax policy, and I’ve also posted about the pitfalls of a tax system that exempts 50 percent of the population. […]
[…] Obama proposes, why would that affect the preferences of the rest of the population? Especially the huge chunk of the population that doesn’t pay income tax? Simply stated, the PFG approach incorrectly assumes that payers and payees are the […]
[…] I’ve already posted on Obama’s class-warfare approach to tax policy, and I’ve also posted about the pitfalls of a tax system that exempts 50 percent of the population. […]
[…] Security payroll tax would result in low-income households paying even less money to Washington. I think everybody should send less to Washington, but I don’t think shifting a greater share of the tax burden onto the middle class and the rich […]
[…] I’ve already posted on Obama’s class-warfare approach to tax policy, and I’ve also posted about the pitfalls of a tax system that exempts 50 percent of the population. […]
[…] I’ve already posted on Obama’s class-warfare approach to tax policy, and I’ve also posted about the pitfalls of a tax system that exempts 50 percent of the population. […]
[…] I shared a presidential debate fantasy in 2012 and a Texas sovereignty fantasy in 2011, and I even shared a fantasy two years ago involving about 50 percent of the population. […]
[…] I shared a presidential debate fantasy in 2012 and a Texas sovereignty fantasy in 2011, and I even shared a fantasy two years ago involving about 50 percent of the population. […]
[…] we have almost half of households not paying federal income tax, and I recognize that there’s a risk on an unhealthy political dynamic if people begin to think they get government for …, but those people are not necessarily looking for freebies from government. Far from it. Many of […]
[…] Obama proposes, why would that affect the preferences of the rest of the population? Especially the huge chunk of the population that doesn’t pay income tax? Simply stated, the PFG approach incorrectly assumes that payers and payees are the […]
[…] Security payroll tax would result in low-income households paying even less money to Washington. I think everybody should send less to Washington, but I don’t think shifting a greater share of the tax burden onto the middle class and the rich […]
[…] Obama proposes, why would that affect the preferences of the rest of the population? Especially the huge chunk of the population that doesn’t pay income tax? Simply stated, the PFG approach incorrectly assumes that payers and payees are the […]
[…] Security payroll tax would result in low-income households paying even less money to Washington. I think everybody should send less to Washington, but I don’t think shifting a greater share of the tax burden onto the middle class and the […]
[…] no way of avoiding a tax increase. Either we go over the cliff, meaning across-the-board hikes for those who pay federal income tax, or Republicans acquiesce to Obama’s class-warfare tax […]
[…] no way of avoiding a tax increase. Either we go over the cliff, meaning across-the-board hikes for those who pay federal income tax, or Republicans acquiesce to Obama’s class-warfare tax […]
[…] no way of avoiding a tax increase. Either we go over the cliff, meaning across-the-board hikes for those who pay federal income tax, or Republicans acquiesce to Obama’s class-warfare tax […]
[…] I Fantasize about a World with No Income Tax, but… […]
[…] we have almost half of households not paying federal income tax, and I recognize that there’s a risk on an unhealthy political dynamic if people begin to think they get government for …, but those people are not necessarily looking for freebies from government. Far from it. Many of […]
[…] confessed to the world, for instance, that I have a fantasy that involves about one-half of the adults in America. And I’ve also admitted to a fantasy involving Gov. Rick Perry of […]
[…] confessed to the world, for instance, that I have a fantasy that involves about one-half of the adults in America. And I’ve also admitted to a fantasy involving Gov. Rick Perry of […]
[…] confessed to the world, for instance, that I have a fantasy that involves about one-half of the adults in America. And I’ve also admitted to a fantasy involving Gov. Rick Perry of […]
[…] confessed to the world, for instance, that I have a fantasy that involves about one-half of the adults in America. And I’ve also admitted to a fantasy involving Gov. Rick Perry of […]
[…] confessed to the world, for instance, that I have a fantasy that involves about one-half of the adults in America. And I’ve also admitted to a fantasy involving Gov. Rick Perry of […]
[…] confessed to the world, for instance, that I have a fantasy that involves about one-half of the adults in America. And I’ve also admitted to a fantasy involving Gov. Rick Perry of […]
[…] we have almost half of households not paying federal income tax, and there’s a risk of an unhealthy political dynamic if people begin to think they get government … But many of those folks have private sector jobs and believe in self reliance and individual […]
[…] we have almost half of households not paying federal income tax, and there’s a risk of an unhealthy political dynamic if people begin to think they get government … But many of those folks have private sector jobs and believe in self reliance and individual […]
[…] we have almost half of households not paying federal income tax, and there’s a risk of an unhealthy political dynamic if people begin to think they get government … But many of those folks have private sector jobs and believe in self reliance and individual […]
[…] we have almost half of households not paying federal income tax, and I recognize that there’s a risk on an unhealthy political dynamic if people begin to think they get government …, but those people are not necessarily looking for freebies from government. Far from it. Many of […]
[…] particularly my points about the long-term entitlement problem, the unfortunate impact of too many people being exempt from the income tax, the fact that America doesn’t suffer from inadequate taxation, the role of Bush’s […]
[…] I’ve already posted on Obama’s class-warfare approach to tax policy, and I’ve also posted about the pitfalls of a tax system that exempts 50 percent of the population. […]
Republican (aka stupid person) = “Let’s give all the wealth to the top 1% of society, and somehow the economy will continue to function.”
Science = “If 99% of America has no money to spend the economy will die.”
It is basic math: 1% of American’s are rich, and 99% of American’s are NOT rich. 1% is less than 99%. If 99% of Americans do not have any disposable income, or no income at all, 99% of the economy WILL FAIL because people who do not have any money to spend will not be able to spend any money. This is not hard for anyone with a functioning brain to understand.
If the economy fails the money/investments of rich people will become WORTHLESS because they only retain their value in a good economy.
You cannot have a successful economy or society based on only taking care of 1% of the population.
I have written a treatise on the inequality of our tax system, particularly the unequal and unjust federal progressive income tax and the selective federal estate tax, as well as the inequality and injustice of calling for tax hikes on only one portion of society (the rich), thus, with all three of these, we are placing the burden of taxation on only one portion of society, instead of equally on the entire population.
You can read it by consulting the following link:
http://kumozarusan.blogspot.com/2011/02/legalized-monetary-discrimination.html
[…] already confessed that I have very abnormal fantasies. And I have admitted on TV that my fantasies are rarely […]
I thought we already had that. It is one of the main reasons for our ballooning debt.
Best place to start with cutting government is the security state which comprises at least a third of federal and state spending.
While most of the households who pay no tax have low incomes many accountants and lawyers make excellent incomes from helping high income households reduce their tax bills.
Low income households do pay Social Security taxes.
Corporations move profits off shore to reduce their taxes – some to the point that they receive tax refunds. General Electric is one of the most sophisticated “accounting” firms in the US employing many ex IRS and Treasury people.
A significant part of today’s deficit is caused by our low historical tax revenues.
Comprehensive tax reform to make the tax system simpler and more transparent is an excellent idea. The work of tax lawyers and accountants is economically unproductive, their abilities could be better employed elsewhere
[…] So what can we say about the internal revenue code using this neutral benchmark? Well, there are lots of genuine loopholes. The government completely exempts compensation in the form of employer-provided health insurance, for instance, and everyone agrees that’s a special tax break. There’s also the standard deduction and personal exemptions, but most people think it’s appropriate to protect poor people from the income tax (though perhaps we’ve gone too far in that direction since only 49 percent of households now pay income tax). […]
[…] So what can we say about the internal revenue code using this neutral benchmark? Well, there are lots of genuine loopholes. The government completely exempts compensation in the form of employer-provided health insurance, for instance, and everyone agrees that’s a special tax break. There’s also the standard deduction and personal exemptions, but most people think it’s appropriate to protect poor people from the income tax (though perhaps we’ve gone too far in that direction since only 49 percent of households now pay income tax). […]
Over and over we hear the argument that the ‘rich’ need to pay their fair share. With close to 50% of the population not contributing at all it’s actually the ‘poor’ who need to pay their fair share.
In the USA only about half the people vote. I once read that a big part of the (usually pro tax) democrats vote came from old people that wanted to tax the young to sustain the old. That may be a pattern as important as the the pattern that Mr. Mitchell shows here
[…] It is difficult for me to see why rational individuals would vote for virtual enslavement under a nanny state. One answer, however, was recently proposed to me: More than 51% of households legally pay no income tax. […]
[…] I Fantasize about a World with No Income Tax, but… […]
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Dan, your logic escapes me. You want no income tax and your upset that some people don’t pay income tax? This is a good thing. We should extend it to everyone. And those people for whom government is “free” still pay payroll taxes, and sales taxes directly and indirectly pay property taxes and corporate income taxes and plenty of others. Surely the problem is not that they pay too little taxes, right?
[…] My friend Dan Mitchell, senior fellow at the Cato Institute, had a frightening blog post today. According to the Ways and Means Committee, 51% of households paid no income tax in 2009. Click here for his piece. […]
Correction: 48.2% of taxpayers pay no (or negative) tax – forgot to do the same adjustment to the denominator
The raw numbers are given at http://waysandmeans.house.gov/UploadedFiles/JCT_response.pdf and seem to represent total tax liability (not additional tax liability over and above withholding). However, the 51% is (as the graphic indicates) a percentage of households. A slightly different perspective comes from doubling all the joint return numbers, since each joint return represents 2 taxpayers. By my calculation (from the raw data), the percentage of taxpayers (not households) paying no (or negative) tax is 29.6%
http://www.republicans.waysandmeans.house.gov/News/DocumentSingle.aspx?DocumentID=247748
from the ways|means committe chair website. committee chair’s opinion on a 2 pg memo from the jt. committee on taxation. looks like “no tax liability” is not defined.
[…] We’ve Hit The Tipping Point with Over 50% Not Paying Taxes Posted on June 22, 2011 by Lenore Print PDF My friend Dan Mitchell had a frightening blog post today. According to the Ways and Means Committee, 51% of households paid no income tax in 2009. Click here for his piece. […]
@Dan I have seen these figures described two ways, 1) as you have described where 51% of taxpayers pay ZERO federal income tax and 2) where 51% of taxpayers do not pay an additional federal income tax above the amount that is already withheld from their paychecks. Can you provide a link to where you got your data so that I can argue against those who think option 2.
An America without an income tax is achievable. Go here: http://www.fairtax.org