The president of the Tax Foundation, Scott Hodge, writes:
Nonpaying status used to be a sure sign of poverty or near-poverty, but Congress and the President have changed the tax laws to pull much of the middle class into the growing pool of nonpayers. The income level at which a typical family of four will owe no income taxes has risen rapidly, now topping $51,000.
As a result, recently released IRS data for the 2008 tax year show that a record 51.6 million filers had no income tax obligation. That means more than 36 percent of all Americans who filed a tax return for 2008 were nonpayers, raising serious doubts about the ability of the income tax system to continue funding the federal government's ballooning expenditures.
When I read this I immediately thought, well, what about the payroll tax? That's the usual left-wing comeback to right-wing commentary about how the income tax burden is tilted toward the rich. The response is usually, "Yeah, well, the rich may pay more of the income tax, but the non-rich are getting socked with the 7.65% Social Security tax, which doesn't apply to income above $106,800." I called the Tax Foundation and their reading of the IRS data that their report is based on is that, for non-payers, the earned income tax credit, child tax credits and the like wipe out not just the income tax obligations, but the payroll tax obligations, too. UPDATE: The Tax Foundation emailed back on Friday to say that actually most FICA taxes are not included in those IRS figures.
There are so many federal taxes that a resourceful person may be able to find some taxes that the "nonpayers" are indeed paying -- say, the federal gasoline tax, for example, which is 18.4 cents a gallon no matter what the driver's income is, or the federal beer tax, which is $18 a barrel no matter what the drinker's income is. A lot of people, as they are pumping the gas or downing the beer, don't even realize they are paying these taxes, because they aren't collected directly from individuals. You could have an argument along those lines about the employer's half of the Social Security tax and how that affects the definition of a nonpayer.
For all that, though, as more and more of the tax burden is imposed on fewer and fewer payers, the nation starts getting into some really fundamental and important questions about taxation without representation and consent of the governed, questions that make you understand why the term Tea Party is heard more and more.