While the number of Americans receiving some form of government assistance steadily expanded during the COVID-19 pandemic, the number of people paying taxes fell to a modern low.
In 2020, 61% of all Americans — an estimated 107 million U.S. citizens — paid no taxes, according to a new report from the Tax Policy Center.
The ranks of U.S. non-taxpayers swelled by 40% thanks to a number of factors unique to last year, according to the report’s analysis.
COVID-19 lockdowns put an estimated 25 million Americans out of work, reducing their annual income — and, with it, their income tax liability.
The federal government issued three rounds of stimulus checks totaling a maximum of $1,200, $600, and $1,400 per person, respectively. The government distributed these checks as refundable tax credits, which reduce the recipient’s total tax liability; they also allow those who owe no taxes to receive government funds, anyway. Politicians also expanded the Child Tax Credit, the Earned Income Tax Credit, and tax credits for childcare; each step removed millions more from the tax rolls.
The latest report undermines the popular but mistaken notion that the wealthy shirk their share of funding the government. President Joe Biden won a standing ovation from the Democratic side of the chamber at the most recent State of the Union address when he said, “It’s time for corporate America and the wealthiest 1% of Americans to, just, begin to pay their fair share.”
The most recent IRS data from 2018 show that the top 1% of income earners paid more in federal income taxes than the bottom 90% percent of U.S. income earners combined.
Under our progressive income tax system, the top 1% paid 40% of all federal income taxes; the top 10% paid 71% percent of all income taxes, and the bottom half of taxpayers paid less than 3% of all U.S. income taxes.
It bears noting: The fact that many Americans paid zero dollars in federal income taxes does not mean they paid no taxes to the federal government — much less the state or local levels.
In 2020, Americans paid federal taxes, including:
- $1.3 trillion in federal withholding taxes for Social Security and Medicare;
- $43 billion in gasoline and diesel taxes for the Highway Fund;
- $10 billion in taxes on alcohol; and
- $1 a pack in cigarette taxes.
But the fact that most Americans did not contribute to funding the general budget fund, which pays for the majority of government spending, affects the political support for government spending. Polls have found that, generally, the less money people pay in taxes, the more likely they are to support government spending programs.
The Pew Research Center found that 60% of families who made less than $30,000 a year favor a bigger government with more spending; while 62% of families making more than $75,000 a year favor a smaller government with less spending.
America’s Founding Fathers feared that a large body of Americans who do not pay taxes could use the government to redistribute the wealth of a small taxpaying base. “The danger to the holders of property can not be disguised if they be undefended against a majority without property,” said James Madison.
Madison warned during the Constitutional Convention that those without property may “combine under the influence of their common situation; in which case, the rights of property & the public liberty, will not be secure in their hands.”
If the temporary measures enacted during the pandemic expire next year as scheduled, the number of people paying taxes should rebound. In 2022, the share of families paying no federal income tax should fall back to the pre-pandemic level of 48%, or two-thirds of single-parent households, according to the Tax Policy Center.
A previous version of this article misstated the size of the first stimulus check. It was a $1,200 check, not a $2,000 check.
The views expressed in this piece are the author’s own and do not necessarily represent those of The Daily Wire.