The >40% is of households. Children typically don't have their own households. And retirees can still pay income tax, both because social security is taxable and because they're making withdrawals from tax-deferred retirement accounts. It's not at all uncommon for higher income retirees to pay more income tax than lower income working people (as it should be, but the point stands that the retirees don't explain the total).
That's only for determining who gets certain tax deductions. Minors still have to pay their own taxes and file their own tax return (if they make more than the threshold for filing) even if they are claimed on their parents taxes. The only way you can have multiple people paying or filing taxes together is if they are married.
> Over 40 percent of Americans don't pay ANY Federal income tax.
> So, by natural law, doesn't any tax cut not benefit them?
Nope, consider a $1,000 refundable tax credit for anyone with under $5,000 AGI. Its a tax cut, and everyone who doesn't pay income tax because of low income plus some of the poorest who do are the only beneficiaries.
I think it's arguable that a tax credit is not a tax cut, precisely because it doesn't necessarily reduce taxes paid but rather can return money not paid.
All benefits for lower income people are subsidies for low wage employers. A tax credit has the benefit of being particularly efficient and with a minimum of bureaucracy, as compared with the typical highly distorting programs like housing or mortgage interest subsides, federally-backed student loans or health insurance subsidies that inflate rents and housing/education/healthcare costs.
It distorts the market is my point and when you hit a recession and cant keep pace with inflation it can lead to unrest - its called out in a recent guardian piece on the yellow vest movement.
Tax credits are cash. That's why they don't distort markets. If you give everyone extra money they can only use for education, education costs go up. If you give them extra money they can only use for housing, housing costs go up. Up compared to everything else -- like wages. Which is a problem.
If you give them the money as cash, nothing is disproportionately affected because the money can be used for anything. There is no inherent reason it would even have to cause inflation, since general inflation is affected by multiple other independent factors, like interest rates, that can be set independently of any tax credits.
The problems in France are caused by just the opposite -- they have many rules that collectively make it very risky and expensive to hire employees, resulting in employers who are wary to hire and a high unemployment rate. Which erodes the tax base, reducing the resources the government has for social programs while inducing demand for them from all of the unemployed people and lower income working people paying high ratios of taxes to benefits to compensate for those unable to find work, leading to widespread discontent and protests.
They would do well to abandon the inefficient collage of price controls and subsidies in favor of direct cash transfer payments from the rich to the poor.