Sunday, April 17, 2011

Who pays taxes? - not many

There are so many breaks that 45 percent of U.S. households will pay no federal income tax for 2010, according to estimates by the Tax Policy Center, a Washington think tank.

"It's the fact that we are using the tax code both to collect revenue, which is its primary purpose, and to deliver these spending benefits that we run into the situation where so many people are paying no taxes," said Roberton Williams, a senior fellow at the center, which generated the estimate of people who pay no income taxes.

The stakes are high but a problem is that a large portion of citizens do not pay taxes. Many of the richest taxpayers pay rates that are below the marginal tax rate of 35%. The tax code has to be changed to increase equity. Taxes should be used to raise revenue and not as a policy tool.

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