50% of Americans do not pay income tax. I have been hearing this mantra from the media and politicians for several weeks now. I have not seen any statistical or logical explanation of this statement. I am hoping that, in this post, I can wrap my head around this monumental claim. How is it that Congress has allowed a set of rules to evolve that facilitates half of the country not paying income tax? What I suspect is that the real situation involves a few Orwellian idioms which imply that many of these people are not paying income tax when, in fact, they are. Let me first explain the Orwellian idioms: Tax credit: A person with children gets a tax credit. It is applied to the amount owed the IRS for income tax. For each child $1000 credit is added. If that person has three children and owes $1,000 his income tax owed becomes -$2,000 ..(1000x3) 1000 = 2000 .. If this were actually a tax credit he would owe nothing and he would not receive any refund as he had credit for the amount he owed. The IRS ends up paying the man $2000 dollars. This makes the credit not a credit at all but an endowment. Paid income tax: If a person did not make a payment to the IRS in any given year, he did not pay income tax Did he pay income tax that year? My assumption is that in the statement of 50% of Americans do not pay income tax. He is included in not paying income tax as he was not required to write a check to the IRS. In fact he did pay his income tax for that year. The IRS elected to pay him (not give credit for) $1000/child and he had three children. He paid $1000 and received $2000 balance. Please let me know if I am correct in assuming that these people are included in the 50% tally. If not, how is it that the Federal Government has gotten us to a point that only half of our citizens pay income tax.