[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.

Thanks for your response, Jack.

Actually they say true costs are hard to pinpoint. There has been lots of creative calculating going on during these long years of the Iraq war and the numbers vary pretty widely depending on who you're reading.

The Iraq war is projected to cost into the trillions. And as far as I know, that was first revealed in 2008. The numbers have probably gone up since then, especially if you add in Afghanistan. Interestingly the Bush administration tried to gloss over the true cost of the war and even cut taxes during the time when billions were being spent over there every month. That added fuel to the fire on our road to a deep recession.

There are creative numbers being reported everywhere today about everything the government has done and is doing and is even planning to do.

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

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

Would they belong to the same bogus organizations as those few scientists who claim that global warming really exists? :thumbup:

By the way, what is stealing from Peter to pay Paul doing for us so far? Sounds to me like Paul keeps squandering Peter's hard-earned dough and Peter just keeps getting more broke.

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

Is this a bonna fide fact, or your opinion? If it's a fact, please give me some names to Google!! Because most economists that I read say that all the spending is going to lead to an increase in interest rates and inflation, probably within 6 months (I can link if ya want)

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

Would they belong to the same bogus organizations as those few scientists who claim that global warming really exists? :mad2:

Yeah Beth... good point. Am I going to believe you or my lyin' eyes?

In all seriousness, to answer all ya'll's comments, I choose to believe what my intellect and my research tell me. And I listen to and believe people whom I think are credible right after I listen to people that hold opposing views - like you all. It is like believin' my lyin' eyes.

plain, you and I obviously do not expose ourselves to the same information. You keep asking me to cite my sources. I have lots and lots of sources. I am constantly open to hearing the news and learning what experts are saying but I sure don't spend my day looking for stuff to use as rebuttal to comments here at LBT. I think that if you don't believe or listen to what many authorities have said publically on the subject anyway, why would I waste my time trying to give you sources that you're just wanting to use to tell me how wrong I am and they are?

You do not seem to have a mind that is closed like a steel trap, but you continue to wonder where I got my info. Look around dude, if you really want to, you'll find all kinds of information just as easily as I do.

plain, you and I obviously do not expose ourselves to the same information.

You do not seem to have a mind that is closed like a steel trap, but you continue to wonder where I got my info. Look around dude, if you really want to, you'll find all kinds of information just as easily as I do.

Right, but......I could find info supporting the "Flat Earth" theory if I wanted to. That doesn't make it a correct theory, know what I mean?

In the age of internet news, it's real easy to believe what you blindly read. But that's asking to be burned (remember Dan Rather and "ROTC-gate"? He could still be working if he had done a little research before trying to break the story).

Edited May 12, 200917 yr by plain

You're absolutely right man. You can read anything. It used to be that if something was in print and reported as news you could pretty well trust it. That's long gone. Now you can even find writings that claim that Dubya is a genius in disguise and that Rush Limbaugh has the country's best interests in his big ole' heart. Yeah, right.

No way can you trust everything you read. It does take some intellect to separate the truth from some writer's wet dream. (In the mood to be crude, sorry.)

It's been made more than apparent that whenever some idiot starts freakin' out on the news, sheeple follow. I.e. swine flu, "global warming," Obama being president-worthy material and not just some "community organizer"... :thumbup:

You keep asking me to cite my sources. I have lots and lots of sources. I am constantly open to hearing the news and learning what experts are saying but I sure don't spend my day looking for stuff to use as rebuttal to comments here at LBT. I think that if you don't believe or listen to what many authorities have said publically on the subject anyway, why would I waste my time trying to give you sources that you're just wanting to use to tell me how wrong I am and they are?.

Honestly and sincerely, BJean, I would like to see any source you can provide from leading economists that would give me some hope that the Obama administration is indeed doing the right thing. Here I am, I am ready to listen to the opposing viewpoint and take into serious consideration. Please provide some links and sources (even by PM if you like) and I promise not to say a word in opposition to you. I just would like to read the info you can provide. Thanks.

They don't exist. These claims are all based on "hope." :smile2:

Well, Beth, in spite of your feelings on the matter, I'd still like to hear from BJean. Just PM them BJ.

Well, Beth, in spite of your feelings on the matter, I'd still like to hear from BJean. Just PM them BJ.

I'd say if legitimate data exists that proves that what is happening is good and/or working, she would want to share it here. She can PM you if you wish, but I would also ask her to provide proof for her claims here as well.

But she does not need or want to "debate" or have to defend her references. You need that. She doesn't. I don't need it either. I am perfectly capable of filtering through the data myself.

But she does not need or want to "debate" or have to defend her references. You need that. She doesn't. I don't need it either. I am perfectly capable of filtering through the data myself.

The problem, Terri, is BJean tosses out information as "fact" yet has nothing factual to back up her claims. That is where plain and I take issue -- if these things were listed as her opinion, that is one thing. But she claims that these are facts yet provides no proof of these "facts."

Once you put something out as a fact, you are, in essence, debating the opposing side. The least she owes when she claims something as fact is to back it up with proof. Now, if she wants to say she "believes" these things are working for the economy, it puts it in a whole nuther ball game. Then she can choose to explain why she believes this.

Obviously she can also choose to not back up her "factual claims" with proof as well, but it diminishes her stand, imo.

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.