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1 Scott A. Hodge, Both Candidates' Tax Plans Will Reduce Millions of Taxpayers' Liability to Zero (or Less) 1 (2008)

handle is hein.taxfoundation/ffbegxz0001 and id is 1 raw text is: FOUNDATION
September 2008
No. 146

FISCAL
FACT

Both Candidates' Tax Plans Will Reduce
Millions of Taxpayers' Liability to Zero (or
Less)
By Scott A. Hodge
Almost Half of Tax Returns Could Reclaim Every Dollar Withheld During the Year
One of the biggest challenges facing both John McCain and Barack Obama in their
commitment to provide tax relief to working-class Americans is the simple fact that millions
of them already pay no personal income taxes.
According to the most recent IRS statistics for 2006, some 45.6 million tax filers-one-third
of all filers-have no tax liability after taking their credits and deductions. For good or ill, this
is a dramatic 57 percent increase since 2000 in the number of Americans who pay no personal
income taxes.
Tax Foundation estimates show that if all of the Obama tax provisions were enacted in 2009,
the number of these nonpayers would rise by about 16 million, to 63 million overall. If all
of the McCain tax proposals were enacted in 2009, the number of nonpayers would rise by
about 15 million, to a total of 62 million overall.
The tax code has always contained provisions that reduce the income tax burden for low-
income workers, such as the standard deduction, personal exemption, and dependent
exemption. Between 1950 and 1990, the percentage of tax filers whose entire tax liability was
wiped out by these provisions averaged 21 percent. Since then, lawmakers have expanded
credits-such as the earned income tax credit (EITC)-while creating a plethora of new

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