At a time when tax collections are expected to save the economy, it has come as a shock to the American authorities that a major chunk of its population files tax returns but pays no annual income tax to the federal government.

The Washington-based Tax Foundation released a list last week of those who actually filed tax returns but because of tax credits and deductions did not have to pay anything.

The southern states, politically dominated by the Republican Party, especially Florida, lead the nation with the highest percentage of its population paying no income tax. For instance, around 39 per cent of Florida’s population did not pay income tax.

According to the Tax Foundation, for a growing number of population, generous tax credits such as the child tax credit and earned income tax credit reduce the federal income tax bills to zero, even for a family of four earning about US $52, 000 annually.

A few weeks earlier, the Tax Policy Center had estimated that 47 percent of all households in the United States paid no income taxes in 2009 although roughly 86 percent of households paid some form of tax and the majority of people who paid no federal taxes were elderly.