Akst: Go after the real tax cheats

You hear it again and again: Half of Americans don't pay any federal income taxes. The implication is that a vast army of freeloaders is getting away with something, while the rest of us are being bled dry by Uncle Sam.

Since taxes and spending are on the front burner in Washington, it's important to make clear why this claim is so profoundly misleading. It's also a golden opportunity to point the finger at those who really are escaping taxation.

Here are the facts. The Tax Policy Center, a nonpartisan outfit in Washington, figures that 46 percent of Americans will pay no federal income taxes in 2011. The reason is simple: These people earn so little it's a wonder they can put food on the table. A family of four earning $26,400, for instance, is legally entitled to pay no federal income taxes. Is this really so shocking? It would be a challenge to keep a hamster on Long Island for $26,400, never mind a family of four.

If you take a closer look at those who pay no federal income tax, as the Tax Policy Center has done, it emerges that 23 percent are so poor they don't even qualify for taxation. That's just how the tax code deals with subsistence levels of income.

The other 23 percent of non-payers, while hardly affluent, are a little better off, and escape the income tax as a result of tax breaks. But these people aren't depreciating oil wells. On the contrary, three-quarters of them benefit from breaks aimed at senior citizens and low-income working families with kids -- advantages that pale in comparison with the tax breaks enjoyed by higher-earning families.

So there are good reasons for most of these people not to be paying federal income taxes. Yet the family making $26,400 does pay lots of other taxes. All families do. They pay payroll taxes, for example, and as a proportion of income, this FICA tax (which is really just another federal income tax) hits them harder than it does families earning 20 times as much.

They also pay excise taxes on products such as gasoline. They pay sales taxes on a variety of goods. Some of them even pay property taxes. Why these levies shouldn't count is beyond me. And in the current economic climate, I can't imagine how they could pay any more. Nine out of 10 families paying no federal income taxes earn less than $50,000. Even the most fortunate, in other words, aren't rolling in money.

Yet again and again, conservatives complain about the people who aren't paying any federal income taxes -- this at a time when the top federal tax rate for the highest earners is just 35 percent, which is very low by historical standards. In the Eisenhower and Kennedy years, the top rate stood at 91 percent.

I believe conservatives are aiming at the wrong target. In fact there are three groups of Americans whose tax avoidance is legendary, and who in fairness ought be paying more. And I'm not talking about hedge fund managers, Wall Street bankers or international financiers.

Let's start instead with the homeless. Internal Revenue agents could infiltrate the shelters, culverts and large cardboard boxes where they congregate. Congress should even consider legislation requiring anyone giving money to a beggar to provide a 1099 form.

A second group overlooked for far too long is the dead. Believe it or not, millions of deceased Americans fail to file tax returns every year. For Pete's sake, it's not as if these people are hard to find!

Finally, there are America's 85 million pet cats. I confess: My own felines retired recently after a lifetime of lucrative mousing during which they never paid a dime in taxes.

There they are: living proof that the IRS turns a blind eye to fat cats. Daniel Akst is a member of the Newsday editorial board.