Want to know why half of Americans pay no income taxes? Keith Hennessey explains it in this excellent post. It comes down to this, in his words:
- a progressive rate structure and a standard deduction;
- the Earned Income Tax Credit, which significantly reduces tax liability for the lowest earners;
- the per-child tax credit, which significantly reduces tax liability for low- and moderate-income families with kids.
Both the left and the right contributed to the enactment of these policies, but the “dramatic increase in the number of people who owed no income taxes since the mid-90s was driven almost entirely by the creation and expansion of the per-child tax credit, a policy driven by the Right.”
To those who want to increase the number of people on the rolls, he says, “you’d be hard pressed to get a big effect just by raising the bottom rates. To affect millions of people you’d need to either scale back EITC or the per-child tax credit. I think both are highly unlikely.”
Social conservatives and those in the lower middle class will not take kindly to reducing EITC or per-child tax credits. I know many people who have come to rely on big tax refund checks, the size of which are dependent on those very credits.
Appealing to people’s need for a sense of moral superiority by bashing the poor is a much safer political strategy.