This Fact: 45% of American households pay no federal income tax

Tax reform is on the agenda and, of course, there are those who would use the issue to promote their political class-warfare agenda.

One of the chief political attacks is that tax cuts are for the rich.  Indeed, that refrain has been used ever since the first tax reforms of the 1920s.  As a matter of history, it was Franklin Delano Roosevelt, who signed the Victory Tax legislation that made is so that 85% of wage earners were paying income tax.  I wonder if the current opponents of tax reform would approve of that.

Since that Victory Tax, we have slow but surely reduced the number of people paying income tax through the guise of “tax reform.”

Today, 45% of Americans pay no federal income tax.  That, of course, as I cover in my book The Divided Era, is a recipe for political division.  It sets up historic resentment between those paying income tax and those that are not.  Keep in mind that in the run up to the Civil War, the South was paying 75% of federal taxes in the form of tariffs. That was no small aspect of the the run up to the division to come.  Some historians believe the South would have seceded on the tax issue alone.

As for today, by definition, tax reform implies reduces taxes on those that are currently paying taxes.  As such, to say tax reform is not for the poor, is to state that since they are not paying taxes currently, they will not get a tax reduction. That is factually true – how could it not be so?

Once tax reform is enacted, that will change.  So, even though they will not be paying less taxes under the plan (they cannot since 45% are not paying taxes), they will benefit substantially from ax reform.

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