More than 37% of American Households “Lucky Duckies”

I’ve mentioned before the factoid about how few American “taxpayers” actually pay federal income taxes. Until now, I haven’t been able to track down any detailed numbers. I found a report from the Tax Policy Center that spells it out.

It turns out that the numbers are even more dramatic than what I’ve been quoting. In part this is due to the effects of recent tax legislation, which (primarily due to an increased per-child tax credit) pulled yet more people off the tax rolls. But also, the figures I’d seen before only showed how many tax filers didn’t owe taxes — ignoring the people who don’t even file.

So here are the numbers: There are about 138,959,000 “estimated nondependent tax units” in the US. That’s tax-wonk-ese for people who aren’t declared as dependents on other people’s tax forms. So, in other words, there are about 139 million potential taxpayers in the US.

Of this bunch, 18,131,000 don’t file returns at all. “Almost all nonfilers have estimated adjusted gross income of less than $10,000. They are also disproportionately elderly…” Then there are 33,544,000 who file returns but don’t end up owing anything.

So, we’ve got 139 million potential taxpayers, of whom over 51 million don’t pay a dime. That’s more than 37% of us.

From another link on the Tax Policy Center’s web site, I read that according to the IRS, 79% of filers who use “known abusive devices” to avoid paying taxes (the bogus theories I’ve been writing about in recent Picket Line entries) and 75% of those who don’t bother to file returns never have to pay up even though the IRS has caught them!

It is demoralizing to honest taxpayers, and encouraging to tax scofflaws, that your odds are better than even of avoiding your tax bill, even if you are caught.

This is from testimony by Leonard E. Burman before the House Ways and Means Committee a few months ago. Burman was complaining that with billions and billions of dollars going uncollected, the IRS had decided it was going to concentrate the bulk of its new enforcement efforts on catching Earned Income Tax Credit cheats — in other words, the working poor.