Great article.
http://taxvox.taxpolicycenter.org/blog/_archives/2010/4/15/4506088.html....
"So who are these folks who pay no federal income taxes? Mostly, they are people who don’t make very much money. Many are elderly: Think a widow living only on Social Security benefits. Others are parents earning less than $20,000. Only about 5 percent are non-elderly households making more than $20,000".
....
"There is, however, another reason why some people don’t pay. For decades, both Democratic and Republican governments have made conscious policy decisions to remove low-income working families from the income tax rolls. And, guess what, sometimes government policy works exactly as intended. That’s what happened this time."
"Let’s take one of the biggest drivers: the Earned Income Tax Credit. Based on an idea (the negative income tax) originated by conservative icon Milton Friedman, the EITC is refundable, so that people who work for low wages can not only wipe out their income tax liability, they can even get a cash payment from the government. The EITC was enacted in 1975 under President Ford, greatly expanded in 1986 under President Reagan, and expanded again under presidents Clinton and Bush (both of them). It's been the very model of bipartisan tax policy (which, I suppose, is why some dislike it so)."
"Both the EITC and the child care credit are explicitly designed to encourage people to work—a goal most of us (including Friedman and Ronald Reagan) thought was a very good thing. "
"Let me close with two questions: Do those who reflexively oppose all tax hikes now favor raising taxes on elderly widows and low-income working families? And what would these critics of small government suggest we do with the revenue windfall this tax hike on the poor would generate? Help finance a cut in the estate tax, perhaps? "
"So, as you file your last-minute returns on Tax Day, keep in mind what really is going on with the now-famous 47 percent. It may not be quite what you think."