What is it? 40% of workers pay no income tax.
Why?
Because they are poor...
I have relatives who haven't paid income tax in maybe thirty years or so.
Also they get an Earned Income Tax Credit... they get money from the govt as a tax credit.
In order to qualify they must be below poverty level, have a job and some income from the job, and the family must have resident children.
It is basically a bonus to get the poor to go to work and get them off welfare.
The 40% are not all poor though. Some above poverty level pay no income taxes either. If one is just above poverty level and has the proper deductions they may pay no taxes either.
And of course there are the super rich who occasionally play the books just right.
Nevertheless everyone pays federal taxes every day no matter their income. Buy a gallon of gas and pay the $0.25 to the the federal government... buy tires for your car and the same thing... hundreds of kinds of excise taxes are paid to the government. We all pay federal taxes on imports... its just that you dont see them as they are built into the purchase price.
With all of this you can kind of see that the EITC is a tax refund for the low income to compensate for the taxes they are paying daily to the Federal Government. It was originally justified in the 70s as a tax deduction for income and non-income taxes already paid.
The 40% number thrown around is totally false... everyone pays federal taxes... the poor pay far less after they get their EITC check.
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