What is your reaction to these numbers? In 2009, roughly 47% of households or 71 million will owe not federal tax, according the Tax Policy Center.
Previous estimates were for 36% to pay no tax, but with the stimulus incentives passed by Congress, the numbers are getting larger.
The vast majority of households making less that $30,000 fall into this category, as do nearly 50% of households making between $30,000 and $40,000 per year.
Nearly 22% of those making between $50,000 and $75,000 end up with no federal tax. Only 9% of those with incomes between $75,000 and $100,000 will pay no tax.
When considering federal income taxes in combination with payroll deductions, 24% will pay no taxes.
Of course there is debate on both sides as to whether the current tax policy is the right one. One thing is clear, the federal government can expect fewer tax dollars and hence will have less money to finance the government.
Should the government raise or lower taxes?











Reader Comments (Page 1 of 1)
10-05-2009 @ 6:18PM
Impulsivity said...
All of these households DO pay tax at about a 10% rate due to the payroll tax which is almost impossible to avoid unless you are self employed and either really creative or really unsuccessful. It is possible to offset the payroll tax with the earned income tax credit, but thats a fraction of the 47% reported here. At the end of the day almost everyone employed (and many collecting unemployment or social security) will owe tax.
On top of this of course comes fees (car registration) property taxes (computed seperately) sales tax (in most states) and other such informal taxes. The idea that half of Americans are paying no tax is just silly propaganda.
This also shows how little most Americans are making. That 47% of Americans make so little they don't pay income tax its partially because they are...making poor wages. I am sure most poor Americans would be more then happy to be given a more fair share of the pie (instead of top executives making 600x more then line workers) and then pay income tax on a living wage instead of no income tax on the starvation wages corporations now pay most workers to maximize executive and shareholder payouts.
Some conservatives call no tax people "lucky duckies" and I'm sure any of them would be more then happy to trade a 15k a year no tax lucky ducky income for a 2 million a year payout that gets taxed at, heaven forbid, a 25-30% effective tax rate.
10-05-2009 @ 8:06PM
richard said...
Impulsivity, just out of curiosity, did you read the post, or just comment?
First, Connie was discussing the Federal tax burden.
Second, you missed this line - "When considering federal income taxes in combination with payroll deductions, 24% will pay no taxes."
We can talk about the fairness of people getting paid 600x till the cows come home (*cough* Straw man *cough), but we should also have a discussion about 25% of the population getting the benefits of the system without paying into it.
Personally, I think that if our tax system was simpler and more transparent, more people would be upset with the profligate nature of our political class, and would work to reign them in.
10-05-2009 @ 9:41PM
william lindblad said...
I have to ask? Of the percentage given, how many are on the social security systems payouts? The vast majority of those that have reached this plateau are, for the most part, retired and don't have enough income to pay, usually, both Federal and State income taxes. HOWEVER, they DO pay sales taxes, and all associated fees (auto registration etc.) like the rest of the public. Since I know that this is a large percentage, it is just another reason why I question the wisdom of statistics and what can be read either into, or from these reports. People on insurance or soc.sec. disability do not pay taxes either and although this is only a small percent, it is part of the sum total. Add up all that goes into the reported figure and it damn well misleading. I do note that the initial 36 jump to 47 fits well with the approx. 10% unemployment rate who I doubt will be paying much, if any, in income taxes.
While the present system is anything but fair a far better answer would be to remove the incompetence in leadership that brought this mess about in the first place and thereafter, work toward getting this country back to work.
Unfortunately, neither the government nor stockholders can get rid of poor executive leadership in business and that will be thorn in rebuilding a business workforce. If there is any law that should change it should be that of stockholders voting on much more clarity in the executive sweet - including compensation. This has been before Congress many times before with the same result. The only real recourse of the public is that of the voting booth and removing politicians that do no see it your way. Until this happens, expect more of the same and an unemployment rate that is likely to be in depression country comes Spring.
10-06-2009 @ 12:18AM
Henry Tuttle said...
I don't think it's unreasonable that a household making 30K or less pay no federal income tax. At that level, tax money comes directly out of the food or housing budget. There's something wrong when someone making 50K+ or 75K+ isn't paying anything.
What IS wrong is that there are people complaining that these people should pay and that those who make 100 times what these people do should have their taxes cut in return? There's something wrong with a society that thinks that 100 people should have to replace their spaghetti dinner with mac and cheese so that someone doesn't have to buy a Bentley instead of a Rolls.
We're not talking about welfare collecting losers here. We're talking about hard working Americans who, for one reason or another, just have lower paying jobs. These people deserve to be able to put food on the table AND receive the benefit of being American without paying federal income tax. And if they should ever become one of the fortunate, they will have to pay too.
10-06-2009 @ 12:38AM
ij70 said...
To answer the question. Instead of raising or lowering taxes, the government should reduce itself, at least in time of economic down turn.
10-06-2009 @ 1:19AM
SouthernMan said...
EVERYBODY and I mean everybody pays taxes. Some more directly than others...those that pay not sop diorectly, pay through those that do. Because business passes on the taxes and ALL overhead to the consumer...thats every consumer...even the little one week old baby, albeit their parents pay for them.
Taxes and our government are out of proportion to what the taxes provide for...meaning government politicos are out of control.
Everybody does need to pay their share. We as a society need to have the politicos understand the correct needs for collection and the correct reasons for the taxes...
Our country was founded on the belief of taxation without representation was wrong...can we collectively hope one day the need to have taxes will be eliminated? Not in my life time...but in a 100 years it is certianly is a worthwhile goal.
10-06-2009 @ 8:44PM
thedude said...
Here's something for you to think about
First I'll give you the scenario:
I earn seven figures and I pay upper six figures in taxes.
I say I "earn" that much because there are fewer than 12,000 people in the US capable of doing my job. My three predecessors define the level of stress in my field.
1. Dead from a heart attack at 45.
2. Forced to leave job due to deteriorating physical and mental conditions
3. Currently institutionalized due to stress related nervous breakdown. I personally know this man. He's a friend. I visit him a few times a month and even though he's okay inside there isn't much hope of him ever returning to society.
Would some minimum wage Joe Sixpack like my paycheck ? Yes ! Would said Joe be able to perform required job functions ? Not in a thousand years !
Now I am single. I have no kids. My impact on the government is non-existant. My spending practices probably keep 30-40 people employed full time.
So just because I am ABLE and willing to do a job that has a ludicrous pay package meand I am "punished" by the government for my success.
Meanwhile some moron who can't keep a full time job or advance at his/her job and isn't capable of wearing a condom and can't even afford to raise the kids they create. These kids who place ever more demand on the system that I finance. These schmucks pay far less in taxes in their lifetime than I do in a month.
You wonder why some less than honest execs cache their cash offshore. Let me tell you, when you see your hard earned money being seized by the government to spend on some ignorant baby factory it gets pretty demoralizing. It only serves to fuel more greed and less charity.
The only fair solution is to take the Federal budget divide by the population and charge each and every citizen the same amount. Parents obviously being responsible for the budget burden of their children instead of receiving tax credits for the little rug rats.
Here's an idea for improving the US economy. Embargo China (all Asia really) and start manufacturing in the US again. Cut all foreign aid. Cut all importation until we have more jobs available than employees to do them. Cut all immigration until every US citizen who can work has work to do.
Most importantly - Ban anyone belonging to the Republican or Democrat parties from ever running for politcal office ever again. We need a political coup. We need an industrial coup.
Lastly, eliminate the commodities market (oil, precious metals, "pork bellies") so price manipulation on critical resources will end and I will be out of a job.
I could go on forever but I will stop now. I'm just saying that the rich shouldering the tax burden of the poor is truly unfair, if that is the way it's going to be then we should bring back slavery. I know I could treat a few dozen slaves in better condition than then the job the government does with welfare or WalMart does with their pathetic payscales (of course WalMart execs and Walton heirs certainly aren't pinching pennies).
Goodnight and have a great day. I know I will.
10-14-2009 @ 12:36PM
mjkinpdx said...
For those of you who say that "everyone pays some tax", it may be true that they pay sales tax, or the occasional car registration, tax on their phone, car insurance, hotel stay, or gasoline, but I didn't see anyone acknowledge that many of those get a net credit from the system in the form of unemployment, food stamps, WIC, TANIF, Section 8 housing assistance, EITC, SSI, medicare, medicade, pell grants, student loans, SCHIP, etc. There are many who are net takers. If this country can be so great with nearly half receiving more in benefits than they contribute, just think what we could do if everyone pulled his own weight. We would be unstopable. And, we would have a much better standard of living as a result; less crime, less idolness, less time to find or make trouble for others. Keep that in mind the next time you hesitate asking your teenager to do some chores because they "need to just enjoy their childhood." The largess the government hands our does not set people free, it enslaves them, and sets a tone of entitlement and indolence. The Government should be out of the charity business and leave that to the charities and religious institutions in the communities where the need exists. Unforntunately, the standard has been forever lowered. We will never go back to expecting everyone to do their all they can do for themselves before asking for someone else to do it for them, because there is no political will. However, that could be cured by changing one thing. Return to the original condition that only landowners can vote. You don't get to have a say until you have some skin in the game.