47% of households pay no federal income taxes
Filed under: Tax
A new report from the nonpartisan Tax Policy Center finds that roughly 47% of households won't end up owing any federal incomes taxes for the year 2009.Most households earning less than $30,000 per year fall into this category, as do nearly half of those earnings between $30,000 and $40,000. Some 22% of households earning between $50,000 and $75,000 pay no income taxes, and an alarming 9% of households between $75,000 and $100,000 pay no taxes.
Those figures don't include payroll taxes.
Most people agree that a progressive tax structure makes sense: It's better to fuel government programs with cash from people who have enough than from milking people who are struggling to put food on the table.
But on the other hand: Isn't it problematic to have a democracy where 100% of households can vote on how money is spent when only 53% of households are contributing to the pot? If a larger percentage of the population paid taxes, would we be tougher on overspending in Washington?
In a country with as much income inequality -- not that there's anything wrong with that -- as the United States, the rich will always pay the overwhelming majority of taxes. But it seems that everyone -- or nearly everyone -- should pay some token amount, if only to give them an incentive to focus on how their money is being spent.
Reader Comments (Page 1 of 1)
10-04-2009 @ 5:20PM
Sandi said...
This is so true. We con't keep on the way we are. More people take from the government than pay in to the government. World's biggest ponzi scheme. That's why I get angry when people complain that new taxes will 'hurt the poor'. I always ask "How?" the person usually says the poor can't afford to pay more. What does this mean? The poor don't pay anything now, and most get Earned Income Credit-cash in their pockets, that they spend on stuff like Wii's and big TV's. I've seen it many times. Then people say any tax cuts will benefit the 'rich' too much. Well, of course, it is the rich who actually pay taxes in the first place! A 5% reduction of $100 is $5, $1000 is $50, but if you already pay $0 (or really -$2000+) then a %5 reduction is 0! Let's get some TRUTH in how and who when talking about taxes!
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10-04-2009 @ 8:50PM
zaposki said...
I like the way you think. I could not have put it any better.
10-04-2009 @ 9:34PM
John B. said...
It's very naive to equate not paying federal income taxes with not paying any of the costs of government. Individual income taxes make up 45% of federal revenues but payroll taxes account for 36%, and every wage-earner pays payroll taxes, which are highly regressive because the rate is flat and income above a limit (I believe $118,000 this year) is exempt from them. And before anyone argues that this money somehow doesn't count because it funds off-budget programs (Social Security and Medicare), remember that Social Security revenues over current expenses are borrowed to fund on-budget operations. I hope the author's other work doesn't reflect the same level of ignorance.
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10-05-2009 @ 12:37AM
Kim said...
Hey John B -- The author of the article clearly states that the numbers don't include payroll taxes. I don't think he is hiding anything... its pretty clearly stated.
I agree with others that have said that everyone who earns an income should be contributing by paying income tax. I can't believe anyone would think it was fair for half the American families to not pay any income tax... If you make income, you should pay your %... if you make a higher income then your percentage will result in higher $s.
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10-05-2009 @ 11:15AM
John B. said...
I didn't say he was hiding anything. I said he was being ignorant because he equated not paying federal income tax with not paying for the costs of government, despite the fact that payroll taxes are a huge source of government revenue. Read more carefully next time.
10-05-2009 @ 3:28PM
John B. said...
I should also point out that the reason most of these households pay no federal income tax is because their deductions/exemptions/credits etc. reduce their liability to zero. So this includes small business owners who had a bad year, middle-class families struggling with the devastating illness of a child, etc. In other words, people who ordinarily pay federal income tax but happened to be struck by accident of fate this year. The idea that your right to vote might be intermittently granted or revoked based on circumstances completely beyond your control is so clearly absurd that it's almost embarrassing to see it floated.
10-05-2009 @ 6:21PM
alvin said...
here is the scoop- it seams most spanish are on welfare/food stamps/free ins/wic, and on and on. they dont work so no payroll taxes are paid. they get earned income credit at tax time for being low income, so here in mass thats an avg of about 7,000.00 $. since they get mass health(free of course) they can have all the kids they want.and lets not even talk about the drug dealing,crime,incarceration costs,etc. the avg person is sick of struggeling to put food on the table and have the immigrants (leagle &illeagle) use food stamps and drive their lexus home from the super market. btw today the legal immagrints get their free health ins. back. heard that on wbz ( am) yesterday.
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10-05-2009 @ 10:38AM
Max Mickey said...
I think the poor pay way less taxes than the rich, BECAUSE THEY ARE POOR.
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10-05-2009 @ 7:07PM
Rich said...
Max,
Many of the 'poor' don't pay taxes b/c they don't work and are leaches of the system.
John B.,
Regardless of what the author says, everyone should pay their portion to the government. We all live here and in one way or the other use and/or benefit from government spending (of course not all gov't spending is not healthy but that's a different topic)...
10-07-2009 @ 9:33AM
stout said...
the problem with taxes, gov't, people in general is waste, greed, and increasing self-centeredness respectively. Everyone should contribute to the greater good and those in charge of distribution should be held accountable for their spending. Remember the days of the $150.00 hammer? well the go'vt still spends too much of our tax money on crap and pie-in-the-sky programs. The "entitlement" mentality is still strong with lots of folks and when confronted they all cry racism, profiling, reverse discrimination or SOMETHING that implies they are not responsble for their behavior or choices and there are no standards that they should have to live by, poor and rich alike.
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10-07-2009 @ 10:15PM
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10-28-2009 @ 6:32PM
Laughing Cloud said...
There are a few flaws in your thinking. I am one of those people that will not be forking out ADDITIONAL money come April 15th. In fact. So by this fact alone, I am one of those people included in your report as not paying taxes.
However, I have paid in a stiff and additional amount with each and every paycheck so that come April 15th I have already paid my taxes and am not left scrambling. My accountant helps me calculate based on current tax laws how much I should pay through payroll to accomplish this. If there are changes in the year, he will call me to advise me. No, im not rich, the accountant I have costs me $250 per year to employ, but he is a valuable part of my "investment" strategy.
I think there are many flaws in our taxation system. Like the family up the street, they have four generations of welfare users under their roof. Mom and Dad migrated to this country, went on welfare, discovered more kids = more money and they had 8 of em. When those kids grew up, they too went on welfare, when they got married, their spouses and children also went on welfare.
They drive sports cars, have a nice home, you should see all the new furniture and everything else always being delivered to their home. None of them have worked a single day since they came to this country, unless you count working as eeking every penny you can out of every welfare system available to them as work.
FOUR GENERATIONS under one roof all on welfare. They have in excess of 30 people in that house, which I feel is bad for the neighborhood and certainly can't be healthy, but they are allowed.
Who pays and who doesn't pay is part of the problem, Welfare lifers are a bigger problem---they dont earn, so they don't pay. '
What happened to, welfare is temporary, not a way of life? Why aren't we making them get off their rumps and get jobs? I think there is a Wal-mart of every corner these days and they hire lots of people that can't speak english if they can't.
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