Surge of "Nonpayers" Will Be Part of Bush Tax Legacy

December 04, 2009

Fiscal Fact No. 202

During 2007, Tax Foundation economists estimate that roughly 46.6 million tax returns faced a zero or negative tax liability. These are the so-called nonpayers, people whose exemptions, deductions and credits wiped out any tax that would have been due. As a result, every dollar that was withheld from their paychecks during the year was refunded. In about half the cases, substantial additional money was "refunded" to the tax filer, although that portion is classified as a government expenditure since it is actually welfare spending, not a tax refund.

Almost a third of all tax returns, 32.6 percent of 143 million federal tax returns filed, were nonpaying in 2007, the most recent year for which IRS data is final. The percentage for 2007 is the second highest, a slight tick down from the all-time highest in 2006, when 33.0 percent of tax filers paid nothing.

The percentage of tax returns with no liability was fairly low in the 1960s and again in the early 1980s. A record had been set every year since 2002, as tax cuts throughout the Bush years, especially the refundable child tax credit, pushed low-to-middle income people off the tax rolls.

Federal Individual Income Tax Returns with Zero of Negative Tax Liability
Year Number of Returns Filed Returns with Zero or Negative Tax Liability Percentage of Returns with Zero or Negative Tax Liability
1950 53,060,098 14,873,416 28.0%
1951 55,447,009 12,798,399 23.1%
1952 56,528,817 12,652,544 22.4%
1953 57,838,184 12,615,033 21.8%
1954 56,747,008 14,113,948 24.9%
1955 58,250,188 13,561,123 23.3%
1956 59,197,004 12,938,358 21.9%
1957 59,825,121 12,959,806 21.7%
1958 59,085,182 13,433,048 22.7%
1959 60,271,297 12,774,384 21.2%
1960 61,027,931 12,966,946 21.2%
1961 61,499,420 12,916,655 21.0%
1962 62,712,386 12,620,023 20.1%
1963 63,943,236 12,620,015 19.7%
1964 65,375,601 14,069,263 21.5%
1965 67,596,300 13,895,506 20.6%
1966 70,160,425 13,451,349 19.2%
1967 71,651,909 12,978,971 18.1%
1968 73,728,708 12,440,000 16.9%
1969 75,834,388 12,112,994 16.0%
1970 74,279,831 14,962,460 20.1%
1971 74,576,407 14,660,035 19.7%
1972 77,572,720 16,703,713 21.5%
1973 80,692,587 16,425,425 20.4%
1974 83,340,190 16,005,423 19.2%
1975 82,229,332 20,738,595 25.2%
1976 84,670,389 20,249,022 23.9%
1977 86,634,640 22,253,502 25.7%
1978 89,771,551 21,083,246 23.5%
1979 92,964,302 20,999,319 22.6%
1980 93,902,469 19,996,225 21.3%
1981 95,396,123 18,671,399 19.6%
1982 95,337,432 18,302,132 19.2%
1983 96,321,310 18,304,987 19.0%
1984 99,438,708 17,799,199 17.9%
1985 101,660,287 18,813,867 18.5%
1986 103,045,170 19,077,757 18.5%
1987 106,996,270 20,272,474 18.9%
1988 109,708,280 22,572,948 20.6%
1989 112,135,673 22,957,318 20.5%
1990 113,717,138 23,854,704 21.0%
1991 114,730,123 25,996,536 22.7%
1992 113,604,503 26,872,557 23.7%
1993 114,601,819 28,166,452 24.6%
1994 115,943,131 28,323,685 24.4%
1995 118,218,327 28,965,338 24.5%
1996 120,351,208 29,421,858 24.4%
1997 122,421,991 28,950,791 23.6%
1998 124,770,662 31,722,764 25.4%
1999 127,075,145 32,529,065 25.6%
2000 129,373,500 32,555,897 25.2%
2001 130,255,237 35,491,707 27.2%
2002 130,076,443 39,112,547 30.1%
2003 130,423,626 41,501,722 31.8%
2004 132,226,042 43,124,108 32.6%
2005 134,372,678 43,802,114 32.6%
2006 138,394,754 45,681,047 33.0%
2007 143,030,461 46,655,760 32.6%

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