There are about 140 million tax payers in the US and only about one half of those pay any federal or state income tax. Of the 70 million who pay no income tax about 25 million of those receive money back from the government even though they paid nothing in. This is because of a number of refundable tax credits most notably the Earned Income Credit.
This past year a family with three children could have up to $56,000 in income and pay no income tax.
These low income families all pay social security tax of 6.2% and Medicare tax of 1.45%. If the government wants to help low income families it does no good to lower income tax but it helps to lower payroll tax.
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