Quote from dumb_mother:
i hope there are riots in the US streets because the government stops giving free money to half of our population (the half that pays precisely 0$ in taxes) - it would mean we are moving in the direction towards success-- luckily everyone loves a loser so i'm safe being near the cubs
Just a small correction. It is commonly thought that those with low incomes pay no income tax, they get it all refunded. This is technically correct but misleadng. (Of course they do pay into entitlements, and they don't get that back, nor should they.)
However, consider the hidden tax of inflation that both the poor and the rich pay. If you accept that, in general, deficit spending leads eventually to inflation, you can see that substituting borrowing for direct taxation via the income tax, will, in almost every case, lead to inflation. In other words, inflation is a substitute for the income tax not paid. You can see this very clearly if you consider the difference between the government taking two dollars of the ten dollars in your pocket as income tax, versus making the ten dollars in your pocket have only eight dollars buying power via inflation. What is the practical difference? There is none!
Now back to the poor. We define it here as those not paying any net income tax, but nevertheless paying the inflation tax. What is the percent of "inflation Tax" paid by the poor relative to their gross income. I have no idea, but I am certain that it is a much larger percent than the wealthy pay, even though, of course, the wealthy pay a much larger amount of inflation tax in nominal terms. So in this sense it is not true that the poor pay no income tax, but they pay it covertly via the inflation tax. And not only that. They pay a higher percentage of their gross income in the inflation tax then do the wealthy.
This penchant for indirect taxation that the U.S. has succumbed to, is in my opinion a root cause of the shrinking middle class and the growing wealthy and poor classes in the US. At the same time, it is, I believe, partly accounting for the growing disparity between those well off and the lower middle class in the U.S., and I don't think this is a good thing for either the wealthy or, of course, the lower middle class.
