[emphasis added by OP]

The Income Tax System is Broken

43 Percent Of Americans Pay No Federal Income Tax, A Sign That Something's Wrong, Writes Declan McCullagh

April 15, 2009 | by Declan McCullagh

(CBS) On April 15, don't be surprised if the line at your local post office is a bit shorter than usual. That's because your neighbors may not be paying any income taxes this year.

An astonishing 43.4 percent of Americans now pay zero or negative federal income taxes. The number of single or jointly-filing "taxpayers" - the word must be applied sparingly - who pay no taxes or receive government handouts has reached 65.6 million, out of a total of 151 million.

Those numbers come from an analysis published yesterday by the Tax Policy Center, a joint project of the Urban Institute and Brookings Institution. Neither is a low-tax or conservative advocacy group; the Urban Institute was created under the Johnson administration during the Great Society era, and it receives most of its funding from the federal government.

"You've got a larger and larger share of people paying less and less for the services provided by the federal government," says Roberton Williams, a senior fellow at the Tax Policy Center. "The concern is that the majority can say, 'Let's have more benefits, spend more,' if they're not paying for it. It's 'free.' That's not a good thing to have."

By historic standards, today's situation is an aberration. Between 1950 and 1990, the number of owe-no-money federal tax returns averaged 21 percent, dipping to 18 percent in 1986, according to Tax Foundation data. In the 1990s, the owe-no-money percentage hovered around 25 percent of taxpayers.

But then politicians began another round of tinkering with the tax code, adding reams of new pages to an already incomprehensible set of rules that even the guy overseeing the IRS can't seem to figure out.

Democrats wanted to lower taxes on the least affluent, while Republicans wanted to lower taxes on everyone. The result was bipartisan enthusiasm for tax credits aimed at everything from children (1997) and college students (1997) to hybrid cars (2005) and homebuyers (2009). Many of these credits dole out cash to people even if they report no income, making them mere government handouts.

"There's no difference at all in terms of the effects on the federal deficit," says Williams of the Tax Policy Center. "It's perfectly equivalent. It's just easier to say, 'I cut your taxes' as opposed to 'I created a new federal program to send money to people.'"

I'm talking here about federal income taxes, not other taxes like Social Security, Medicare, state income taxes, sales taxes, or car registration taxes, some of which are extracted through payroll deductions. The owe-no-money crowd tends to get hit by at least some of those.

The perils of today's situation should be obvious. The United States is close to a tipping point - where most people can skip the post office run on April 15 to mail a check because they're expecting one from the government instead.

"It is somewhat odd that you have a decreasing number of folks paying into the federal income tax system, a decreasing number of folks who have a stake in what the government pays for," says Matt Moon of the non-partisan Tax Foundation in Washington, D.C.

It then becomes tempting to vote for politicians promising more and more handouts, paid for by money forcibly extracted from an ever-shrinking number of their neighbors. In addition to being immoral, it's poor public policy: people who pay no taxes but nevertheless get benefits are less likely to be careful overseers of their elected representatives.

"At some point people become less and less invested in making sure their government is accountable and frugal," says Peter Sepp, vice president for policy and communications at the National Taxpayers Union, a lower-tax advocacy group. "If you pay very little for getting all kinds of government benefits, you might view those programs as a bargain, even though they may waste tens of billions of dollars a year."

As a candidate, President Obama promised still more tax credits, including ones aimed at child care, "clean cars," and savings accounts. As the Wall Street Journal explained at the time: "You can receive these checks even if you have no income-tax liability. In other words, they are an income transfer - a federal check - from taxpayers to nontaxpayers. Once upon a time we called this 'welfare,' or in George McGovern's 1972 campaign a 'Demogrant.'"

A recession, the stimulus, and innumerable bailouts have placed Mr. Obama's plans on hold. But the expiration of the Bush tax cuts at midnight on December 31, 2010 will renew interest in a tax law rewrite.

That will be an opportunity to gut the current system and replace it with something simpler and fairer. After all, if government is important enough to force most of us to work until April 13 to pay its bills, why shouldn't everyone share the pain?

Declan McCullagh is the chief political correspondent for CNET and a CBS News EconWatch contributor. Previously, he was Wired's Washington bureau chief and a reporter for Time.com and Time magazine in Washington, D.C. He has taught journalism, public policy, and First Amendment law. He is an occasional programmer, avid analog and digital photographer, and lives with his wife in the San Francisco Bay area.

By Delcan McCullagh

© MMIX, CBS Interactive Inc. All Rights Reserved.

Btw Beth, not that you deserve a reponse from me, but for the record, when I post things here they are my opinion. They are what I believe to be factual, although I do not print a disclaimer at the bottom of each post saying that if something I've said is not factual, you can shoot me. Um kay? :crying:

Come on Beth. You're the queen of tossing out your own personal opinions. And you do it loud and with an exclamation mark.

And you're the queen of tossing out "fact" and not backing it up. At least when I pass an opinion, I say it's my opinion and don't portray it as fact that whole groups of "scientists" or "economists" claim is true.

And when I toss out fact with info to back it up, you come on with another of your sad little quips.

Seriously, BJean, if you HAVE info to back up your claims/facts, please share them. You ARE trying to get your point across after all, no? Or is this just your opinion that all these economists think this theft of Peter to pay Paul is really working?

Btw Beth, not that you deserve a reponse from me, but for the record, when I post things here they are my opinion. They are what I believe to be factual, although I do not print a disclaimer at the bottom of each post saying that if something I've said is not factual, you can shoot me. Um kay? :crying:

Shoot you? Why would I do that? I find you rather entertaining.

So... this is an opinion and not a fact?

"However, most credible economists all agree that the steps that the Obama administration has taken are vital to a recovery."

Interesting, as it's presented as a fact. But, mkay.

I have not read all of the comments, but I like Obama, but I do question some of the methods.

re: "we'll pay it off the same way we will pay off the astronomical debt of the Iraq war and the Bush administration debacle:

I'm all for getting this out in front of us: to date the Iraqi War has not cost as much as AIG all by itself was recently GIVEN just last month.

Now, let's all get credible.

Whoa. Do you have a source for your assertion that the Iraq war costs less than AIG was given in one month because you are just plain wrong.

"""Of those $700 billion, Iraq will have received $526 billion by mid-2008, or 75% of total war appropriations. In late 2007, the Bush administration requested an additional $105 billion for 2008 war costs. On Feb. 4, 2008, the administration added yet another “placeholder” request for $70 billion. Congress has yet to act on the two requests, which would bring total war funding to $875 billion, with the Iraq war accounting for about $657 billion of that"""

MY source: What Are the Costs of War in Iraq - Iraq War Costs

I believe it is better to spend all our money on protecting us from future terrorists than to spend it on unnecessary crap!

What exactly is "crap"? If you are speaking about healthcare for human beings then I don't see that as "crap". If you are talking about education I don't see our children as "crap". What exact "crap" that the President has put forward are you objecting too?

bjean - just thought i'd say you crack me up...

i don't read long posts myself, i will click on links - but feel i live a balanced life, w/the spousal unit and i not sharing the same political views.

personally, i think the community organizer is doing better job than the former owner of a rotten major league baseball team.....oh yeah and he was also the gov...,:crying:

LOL yeah, and a lousy governor at that luluc. No one in his right mind ever predicted that George W. would be able to win an election of this kind. Not even his mother, or so they say. Of course there has always been a lot of questions about whether he really won the election or if it was stolen.

Beth, do you really think this is about "robbing Peter to pay Paul"? If that is your assessment, I doubt that you and I have anything to talk about regarding the economy.

I must say though that I not so secretly enjoy the fact that I'm entertaining for you. I certainly try. Although I realize that most of the time when I am trying to be humorous, people just think I'm being mean.

I obviously don't have your gift.

There have been many talk shows and discussion groups televised where prominent economists have backed up the president's plan of action. They have said over and over that the steps he has taken have been necessary. And they have also said, on many shows, that the leading economists all agree on the necessity of taking the action that the president has.

If you haven't heard it, it sure isn't my fault that you haven't been listening to the same broadcasts. I have also seen shows where the occasional economist has said that there may have been better ways to bring us out of the recession. None of them has ever come up with a viable plan. Or any alternative, for that matter.

Now I know we were talking about taxes in the beginning, but the president's approach and his plans all involve taxes and the recession is a big part of that.

I was speaking to the recession when I said what you consider to be wrong about economists having backed the president's plan to get the country back on sound footing. But as far as I am concerned, from everything I have gleaned from news sources, including a couple of newspapers, what I stated is fact.

If you have factual data that suggests otherwise, then I think it is incumbent on you to prove me wrong. Wouldn't that be a lot more productive than you whining about what I do?

Come on Beth. You're the queen of tossing out your own personal opinions. And you do it loud and with an exclamation mark.

Don't hold your breath Terri, waiting for me to run off and find links to "back up" my statements. If I run across anything that is relevant to this discussion, I will do as you have asked and I will bring them to you. But the information highway is constantly changing and new and different information is constantly being made available to us. Looking back is a waste of time if you are going to keep up with what is going on everyday.

And I will tell you again, what I have said many times before: I do not care one whit if I have credibility or a strong "stand" on the issues with you all. You do not care one whit if I share your beliefs either. You say what you want and I may argue with you, just as you may argue with me. But you have every right to say what you believe and think what you will and I know that you have come by your beliefs in lots of different ways. I don't expect you to treat this as if you are writing a thesis.

Some people, like Jack, enjoy pulling out stuff that he believes provokes discussion and even argument. That is his right and his style here at LBT. It has never been my style and I just don't have time for it. Life moves too fast. I post and then I move on.

Please do not think that you must be moved by anything that I have to say. If you disagree with me, tell me, I can take it. I will probably argue with you though. This forum is therapy for me. I have a lot going on in my life and jumping on here and spouting off from time to time is just plain fun. So if this causes people like Beth to say bad things about me and make lame accusations about my motives, it just comes with the territory. With certain people, it is easy to consider the source and dismiss it (and them.) You're perfectly free to dismiss me and what I say without a second thought.

On the other hand, if you find something I say that peaks your interest and you want to know more, try watching Rachel Maddow or listening to your president, or visiting his website, or watching some of the other news broadcasts besides the Rupert Murdock channel. Trust me, the information is readily available without any assist from me.

All I asked for was some info about the economists you referred to. Nevermind then.

LOL yeah, and a lousy governor at that luluc. No one in his right mind ever predicted that George W. would be able to win an election of this kind. Not even his mother, or so they say. Of course there has always been a lot of questions about whether he really won the election or if it was stolen.

Yeah...I hear Dubya was a cannibal, that he is an excessive masturbator, and that he secretly worships Satan. I heard that somewhere and if you disagree, quit watching FOX news exclusively.

I was speaking to the recession when I said what you consider to be wrong about economists having backed the president's plan to get the country back on sound footing. But as far as I am concerned, from everything I have gleaned from news sources, including a couple of newspapers, what I stated is fact.

If you have factual data that suggests otherwise, then I think it is incumbent on you to prove me wrong. Wouldn't that be a lot more productive than you whining about what I do?

Well, I'm not Beth, but here's the latest report from AP, as found on MSNBC.com (I purposely was looking on non-conservative sites, BJean.)

Stocks drop on economy worries - Stocks & economy- msnbc.com

read and discuss. Or don't, if it doesn't support your view.

LOL yeah, and a lousy governor at that luluc. No one in his right mind ever predicted that George W. would be able to win an election of this kind. Not even his mother, or so they say. Of course there has always been a lot of questions about whether he really won the election or if it was stolen.

You mean like how a certain someone still has not proven he was born in this country? :crying:

Yeah...I hear Dubya was a cannibal, that he is an excessive masturbator, and that he secretly worships Satan. I heard that somewhere and if you disagree, quit watching FOX news exclusively..

well i hear that W gave up the tug when he gave up the jug...

Beth, do you really think this is about "robbing Peter to pay Paul"?

Absolutely I do. What benefit am I receiving when my tax dollars are being used to keep them afloat or pay bonuses to people who ran these businesses into the ground? What benefit am I receiving when my tax dollars are being used to bail out the auto industry rather than allowing them to do the RIGHT thing and file bankruptcy so that these insane contracts can be renegotiated or, better yet, done away with? What benefit am I receiving when my tax dollars are being used to pay other people's mortgages??

I do everything right, don't overextend myself, work hard, pay my bills on time, etc., yet many who made $100,000 but spent $125,000 every year are getting the benefit of MY hard-earned money to essentially reward them for bad decisions they chose to make. I will say now before the howling begins that I am not speaking of those who legitimately fell on hard times. I am talking those who bought houses they couldn't afford or had no intention of paying for.

So do I feel that I'm being stolen from to pay off the bullcrap choices others made, whether personal or commercial? Hell yeah!

If that is your assessment, I doubt that you and I have anything to talk about regarding the economy.

Then I guess we don't. I don't believe the economy was created to be "my brother's keeper." I choose to keep as much of my money as possible and for the government to be good stewards of our money. Neither of these things happen. Instead, "economy" now means redistribution of wealth, and that is stealing no matter what you want to call it.

I obviously don't have your gift.

That's okay. I mean, could this board really handle two of me? :crying:

There have been many talk shows and discussion groups televised where prominent economists have backed up the president's plan of action. They have said over and over that the steps he has taken have been necessary. And they have also said, on many shows, that the leading economists all agree on the necessity of taking the action that the president has.

If you haven't heard it, it sure isn't my fault that you haven't been listening to the same broadcasts.

<snip>

If you have factual data that suggests otherwise, then I think it is incumbent on you to prove me wrong. Wouldn't that be a lot more productive than you whining about what I do?

The thing is, BJean, I don't hear what you hear because I don't listen to left-leaning media, which pretty much encompasses the entire industry (with very few exceptions). And what I would hear or read would be more right-leaning compared to what you listen to or read, I'm sure. So we could both back up our stances with quotes. What I want to SEE is data that back up the quotes/opinions of others, whether they be yours or some economist who may simply be an Obama lackey for all I know.

The thing about economics is you typically don't know much about whether something's going to work until you try it and it does or it doesn't. It's not an exact science due to all the variables that are at stake here -- one of which is simple human nature.

well i hear that W gave up the tug when he gave up the jug...

Okay, ew! :crying: LOL