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How do so many citizens get away with not paying any federal income taxes? Through popular programs that use the tax system as a means of wealth redistribution. Programs like the earned income tax credit and child tax credit allow many Americans to take from the common pot without contributing anything.

While tax time is a headache for most working people, it's Christmas for many low-income or no-income folks. No wonder our nation is so broke.

We all benefit from the many services provided by government, but only some of us have to pay for those services. The rest receive them for free, yet they are still crying that wealthy people aren't paying enough.

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The number one reason should come as no surprise. It’s because they have low incomes. As my colleague Bob Williams notes:

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A couple with two children earning less than $26,400 will pay no federal income tax this year because their $11,600 standard deduction and four exemptions of $3,700 each reduce their taxable income to zero. The basic structure of the income tax simply exempts subsistence levels of income from tax.

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Low incomes account for fully half of the people who pay no federal income tax.

The second reason is that for many senior citizens, Social Security benefits are exempt from federal income taxes. That accounts for about 22% of the people who pay no federal income tax.

The third reason is that America uses the tax code to provide benefits to low-income families, particularly those with children. Taken together, the earned income tax credit, the child credit, and the childcare credit account for about 15% of the people who pay no federal income tax.

Taken together, those three factors — incomes that fall below the standard deduction; the exemption for most Social Security benefits; and tax benefits aimed at low-income families and children — account for almost 90% of the Americans who pay no federal income tax.

For further details and info about the other 10%, please see the study ( http://taxpolicycenter.org/UploadedPDF/1001547-Why-No-Income-Tax.pdf).

P.S.: The true fact — about half of Americans do not pay federal income taxes – often gets transmogrified in public discourse into the decidedly untrue claim that half of Americans pay no taxes. That simply isn’t so. There are many other taxes in our fair land, including payroll taxes, excise taxes, sales taxes, state income taxes, and property taxes. People who don’t pay federal income taxes still encounter these other taxes. http://dmarron.com/2011/07/27/why-do-half-of-americans-pay-no-federal-
income-tax/ your answer. "Christmas" my fucking ASS! In other words, HALF of those who pay no FEDERAL income tax have "incomes" below the poverty line (which keeps being raised); that they should pay more taxes than they already do (note above) when they can't earn enough money to LIVE decently is the most ridiculous argument I've heard in a while!

Get employers to pay people decent, living wages, and they'll be paying taxes. Meanwhile, at least leave them alone to provide for their families and pay the OTHER taxes.

And while we're at it, let's talk about the huge corporations making billions which don't pay federal taxes, either:

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One of the driving forces behind the ongoing Occupy Wall Street protests is the fact that corporations have not been paying their fair share in taxes. A new report from Citizens for Tax Justice will no nothing to alleviate the protesters’ frustration.

CTJ looked at 280 companies, all of them members of the Fortune 500, and found that “while the federal corporate tax code ostensibly requires big corporations to pay a 35 percent corporate income tax rate, on average, the 280 corporations in our study paid only about half that amount.” And those who paid even half the statutory corporate tax rate paid far more than many of their competitors.

In fact, in the last three years, 78 corporations had at least one year where they paid no federal income tax at all, while 30 corporations paid not a dime over the entire three years. Those 30 corporations paid nothing, even though they made $160 billion in profits over that period:

– Seventy-eight of the 280 companies paid zero or less in federal income taxes in at least one year from 2008 to 2010…In the years they paid no income tax, these companies earned $156 billion in pretax U.S. profits. But instead of paying $55 billion in income taxes as the 35 percent corporate tax rate seems to require, these companies generated so many excess tax breaks that they reported negative taxes (often receiving outright tax rebate checks from the U.S. Treasury), totaling $21.8 billion. These companies’ “negative tax rates” mean that they made more after taxes than before taxes in those no-tax years.

– Thirty corporations paid less than nothing in aggregate federal income taxes over the entire 2008-10 period. These companies, whose pretax U.S. profits totaled $160 billion over the three years, included: Pepco Holdings (–57.6% tax rate), General Electric (–45.3%), DuPont (–3.4%), Verizon (–2.9%), Boeing (–1.8%), Wells Fargo (–1.4%) and Honeywell (–0.7%).

As CTJ’s report put it, “just as workers pay their fair share of taxes on their earnings, so should successful businesses pay their fair share on their success. But today corporate tax loopholes are so out of control that most Americans can rightfully complain, ‘I pay more federal income taxes than General Electric, Boeing, DuPont, Wells Fargo, Verizon, etc., etc., all put together.’ That’s an unacceptable situation.” And its one that lawmakers could fix, if they were willing to stand up to the nation’s biggest corporations. http://thinkprogress.org/economy/2011/11/03/360185/30-corporations-no-
taxes/ think those corporations were too poor to pay takes? Talk to THEM about paying their fair share!

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While the number of unemployed workers has held steady at around 14 million in recent months, another telling measure of frustration in the labor market—the number of underemployed individuals—rose for a third consecutive month in September, by almost a half of a million people.

Almost 9.3 million Americans are considered underemployed, defined by the Bureau of Labor Statistics as working part-time for economic reasons, such as unfavorable business conditions or seasonal declines in demand.
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Put together, almost 26 million Americans are either unemployed, underemployed, or involuntarily working part-time—a number experts say is unprecedented.

To get a more accurate understanding of the struggles that many Americans face, that base should be broadened even further. He says it's important to consider people who are working, but at substandard wages. About 20 percent of adults have jobs that pay poverty-level wages (the poverty line is currently $22,500 a year). I'd consider that to be another version of underemployment—mainly jobs that are just too low-quality. Americans who fall below the poverty line make less than $10.50 an hour.

The labor market is just not delivering for Americans what it should be delivering. The weaknesses are on multiple dimensions—one is just the quantity of jobs, and the other is the quality of jobs that do exist."

Economists say the high number of underemployed workers is a sign of the tough economic times. One of the things that seems to be happening these days is that companies in an uncertain environment are tending to take people on part-time instead of full-time because they don't want to make that full-time commitment. By taking on part-time employees instead of full-timers, companies aren't forced to pay benefits or bring on employees for extended periods of time. It's also a lot more difficult to let full-time workers go. That's left millions of Americans trying to make ends meet by working multiple part-time jobs. http://investingadvicebygeorge.blogspot.com/2011/10/unprecedented-26-m
illion-americans-are.html the 2000s, with job losses prevalent and legions held captive in positions that have gone stale, underemployment has become a critical cause of worker dissatisfaction. Here's why.

The 'I'll Take Any Job' Syndrome

Suffering the slings and arrows of this unpredictable labor market, many laid-off professionals have been forced to take low-skilled jobs for a fraction of the pay and prestige of their former posts.

A forced move into a new field usually means a cut in your standard of living.

"I can't think of any professionals who haven't taken a hit on salary," says Glen Wise, an engineer retired from Ciba Geigy, of the members of the Triad Job Search Network in Greensboro, North Carolina, which he advises.

The Underemployment-in-Place Syndrome

Can you become underemployed just by staying in one professional position for too long? You can, and in the 2000s, many employers have foisted underemployment on their workers by handing them ever-larger portions of the same work without granting them higher responsibilities. http://career-advice.monster.com/job-search/career-assessment/what-can
-you-do-about-underemployment/article.aspx there's the upcoming generation of workers:

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According to Pew, many adults in their late 20s and early 30s have also felt the impact of the weak economy. Among all 18- to 34-year-olds, half (49 percent) say they have taken a job they didn’t want just to pay the bills, with 24 percent saying they have taken an unpaid job to gain work experience.

In addition, young workers feel more vulnerable than they used to. In a 1998 survey, 65 percent of 18- to 34-year-olds working full time or part time said they were extremely or very confident that they could find another job if they lost or left their current job. The share of highly confident fell dramatically to 25 percent in 2009. http://www.adweek.com/sa-article/coming-age-down-economy-138394]