Tax Foundation predicts that for the next tax year (tax year 2004), 44 million units (individuals or families) will owe zero federal tax or will get some tax credit, and another 14 million units will earn less than necessary to file tax return. These zero-tax filers represents roughly 122 million Americans, or 44% of the population.
This article also includes detailed breakout by income level, age, race, gender, filing status and working status of those 58 million units. As a conclusion, "[b]roadly speaking, the 44 million zero-tax filers are: low-income, young, female-headed households, part-time workers, and beneficiaries of the $1,000 per-child tax credit." "Broadly, people who won't be filing a tax return for 2004 are college students, retirees, and single parents. They have part-time jobs but earn less than the mimumum amounts that are required to file a tax return.
The authors are asking the right question at the end: "These findings raise some serious questions about the future of the U.S. income tax system. Are any future tax cuts, or even tax reforms, possible when the lion’s share of the tax burden is increasingly borne by a shrinking pool of taxpayers who – at least on paper – appear to be "upper-income"? And will the expanding pool of non-payers demand even higher income taxes? These are questions lawmakers must begin to debate."
Source: Tax Guru-Ker$tetter Letter
[To undertand the 14 million units who earn less than what is required to file tax, read this excerpt from the same article:
"Americans are required to file a tax return if their income is over a certain amount. For single individuals under 65, that amount is $7,800. For those 65 or older, the amount is $8,950 (Social Security benefits are not included). Married couples must file if their gross income is at least $15,600. Heads of households (single parents) must file if they earn at least $10,050."]