Little income, little to tax

And this is from the conservative "The Economist"

http://www.economist.com/blogs/democracyinamerica/2011/07/tax-fairness?fsrc=scn%2Ffb%2Fwl%2Fbl%2Flittleincomelittletotax

Jul 28th 2011, 18:10 by M.S.

ONE argument often deployed against tax hikes for the rich is that the burden of taxation is already unfairly skewed, since roughly half of Americans pay no federal income tax at all. Sometimes, the line is incorrectly adumbrated to a claim that half of Americans pay no taxes, which isn't true; all Americans pay some mix of payroll taxes, state taxes, capital-gains taxes, sales taxes and so forth. The overall burden of taxation is pretty even across income groups: the total effective tax rate ranges from 16% for the bottom quintile to 31% for the top quintile, and in fact it stays at 31% right up through the top 1% of earners. But the point that about half of American tax units pay no federal income tax is correct. Why not? Aaron Carroll and Donald Marron point us to a new report by the Tax Policy Center (a joint project of the Urban Institute and the Brookings Institution), which explains that there are two basic reasons why people don't pay federal income tax: either they're very poor, or they're covered by tax expenditures, mainly the ones that benefit the elderly and children. Mr Marron:

[.....]

American society is becoming more unequal. Incomes at the bottom level are stagnant or declining, while incomes at the top are rising. This is why a large number of people at the bottom levels of the income tier don't make enough money to pay any federal income tax. At the same time, we're not collecting enough overall revenue to pay for our government spending. We could try to raise the money we need by repealing tax breaks for poor children and the elderly, if we were sort of mean and determined to hurt people who don't have the political strength to resist, but I think it makes more sense to raise the taxes we need by increasing rates on relatively well-off people whose incomes have risen dramatically over the past couple of decades and can thus afford to pay them.

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