Nearly half of all households in US, do not owe federal income tax

[MadelynIris]

47% of households owe no tax - and their ranks are growing - Sep. 30, 2009

NEW YORK (CNNMoney.com) -- Most people think they pay too much to Uncle Sam, but for some people it simply is not true.

In 2009, roughly 47% of households, or 71 million, will not owe any federal income tax, according to estimates by the nonpartisan Tax Policy Center.

Some in that group will even get additional money from the government because they qualify for refundable tax breaks.

The ranks of those whose major federal tax burdens net out at zero -- or less -- is on the rise. The center's original 2009 estimate was 38%. That was before enactment in February of the $787 billion economic recovery package, which included a host of new or expanded tax breaks.

The issue doesn't get a lot of attention even as lawmakers debate how to pay for policy initiatives like health reform, whether to extend the Bush tax cuts and how to reduce the deficit.

The vast majority of households making up to $30,000 fall into the category, as do nearly half of all households making between $30,000 and $40,000.

As you move up the income scale the percentages drop.

Nearly 22% of those making between $50,000 and $75,000 end up with no federal income tax liability or negative liability as do 9% of households with incomes between $75,000 and $100,000.

And their is more...

I get the idea of a progressive tax system. But isn't this a little to progressive. Should have the country not contribute to the federal tax revenue? Seems a bit unfair. Perhaps is should just be a very low percentage, but still pay something, just to contribute to the overall good of society.

?

 

[financeguy]

I'm kind of surprised by these stats. Not sure what to think at the moment. At a time when the deficit needs plugging it might not be unreasonable to increase the income tax on middle-to-high range earners, say 50-100k. However I would not agree with increasing taxes on households with incomes below say 30 or 40k.

 

[Se7en]

But isn't this a little to progressive.

no.

 

[A stor]

Basically, the working class pays a little more during the tax revenue year. Claiming little or no deductions. Thus, letting the government invest or use our money, how ever it chooses, while earning interest. Money is taken from our paychecks, which is overpaid, by us. So, we get a tax refund. To say that the working class doesn't pay taxes. Is ridiculous.....

We don't have the same "tax havens" or write off expenditures, as the rich.

 

[BVS]

Should have the country not contribute to the federal tax revenue? Seems a bit unfair.

You seem to be slightly confused. You don't think we're paying?

Last time I looked I still have taxes taken out of every pay check of mine.

 

[KhanadaRhodes]

You seem to be slightly confused. You don't think we're paying?

Last time I looked I still have taxes taken out of every pay check of mine.

that's what i was thinking. just because most do not owe money at the end of the year doesn't mean they pay nothing. it means the person was smart enough to fill out their w-2s so they would not owe. i usually get a refund every year. it's not equal to what i paid throughout the year though. it doesn't zero out. i'm not complaining though. taxes are a necessity.

 

[INDY500]

The article is right. The botton 50% of taxpayers pay under 5% of the Federal taxes. I suppose I'd be singing "Mmm, Mmm, Mm" odes to politicians too if I knew I wouldn't be footing the bill for their spending sprees.

 

[Irvine511]

considering the top 5% own 95% of the wealth in this country, i guess it seems about right.

and yet, we have GOP politicians saying that every problem under the sun for the lower-income white folks in red states are due to a black man running things having high taxes.

'fraid not. you can't afford child care not because your taxes are high, but because your wages have actually decreased over the past 8 years and your health care has skyrocketed.

 

[BVS]

The article is right. The botton 50% of taxpayers pay under 5% of the Federal taxes. I suppose I'd be singing "Mmm, Mmm, Mm" odes to politicians too if I knew I wouldn't be footing the bill for their spending sprees.

Cry me a river.

Mr Smith and Mr Jones went to the same school, both have bachelor's degree, both work the same hours, both work their ass off. Both succesful in their fields. Mr Smith is an architect. Mr Jones a petroleum engineer. Mr Smith struggles to put his 2 kids through college, while Mr Jones puts his 2 kids through no problem with huge amounts of disposable income to boot and he's bitching because he pays more taxes? Really? Just because he chose a different major?

 

[U2DMfan]

In 2009, roughly 47% of households, or 71 million, will not owe any federal income tax, according to estimates by the nonpartisan Tax Policy Center.

Not owing doesn't mean "didn't pay".

In fact, that 47% includes those who paid too much.

Talk about a com-fucking-pletely misleading thread title.

ETA, I had to actually click the link to make sure I wasn't pointing the finger at the wrong person. Yep, sure enough.

The title of the article says "47% owe no tax".

 

[MadelynIris]

The ranks of those whose major federal tax burdens net out at zero -- or less -- is on the rise. The center's original 2009 estimate was 38%. That was before enactment in February of the $787 billion economic recovery package, which included a host of new or expanded tax breaks.

Net out to zero. That means at the end of the day, you're net loss to the gov is 0.

That means your contribution to the federal tax revenue is 0.

But you are paying social security, and medicare, for services rendered someday.

 

[A stor]

You seem to be slightly confused. You don't think we're paying?

Last time I looked I still have taxes taken out of every pay check of mine.

Same here........

 

[Se7en]

Net out to zero. That means at the end of the day, you're net loss to the gov is 0.

i wonder if the net calculation includes the opportunity cost of allowing the government to hold a portion of our income for most of the year? not really directed at you, just generally curious.

That means your contribution to the federal tax revenue is 0.
But you are paying social security, and medicare, for services rendered someday.

as well as a federal gas tax and fees for any federal service that might charge.

 

[A stor]

Not owing doesn't mean "didn't pay".

In fact, that 47% includes those who paid too much.

Talk about a com-fucking-pletely misleading thread title.

ETA, I had to actually click the link to make sure I wasn't pointing the finger at the wrong person. Yep, sure enough.

The title of the article says "47% owe no tax".

Yes......that's more like it!

 

[A stor]

considering the top 5% own 95% of the wealth in this country, i guess it seems about right.

and yet, we have GOP politicians saying that every problem under the sun for the lower-income white folks in red states are due to a black man running things having high taxes.

'fraid not. you can't afford child care not because your taxes are high, but because your wages have actually decreased over the past 8 years and your health care has skyrocketed.

Bravo!

 

[MadelynIris]

A stor, you did you read the article? Again, even though one of the 47% might have fed taxes taken out of your pay check, at the end of the year, after filing taxes, the net loss to the gov is 0.

 

[A stor]

I don't understand.

 

[Irvine511]

A stor, you did you read the article? Again, even though one of the 47% might have fed taxes taken out of your pay check, at the end of the year, after filing taxes, the net loss to the gov is 0.

what about the distribution of wealth in this country? if the top 5% (maybe even 1.5%) own 95% of the wealth, isn't that wealth what's available to be taxed?

 

[Vincent Vega]

I don't understand.

You pay $100, you get $100, net $0.

 

[CTU2fan]

Yep, if your net is 0 then you should be getting back whatever you paid in all year. Or if you filled out your tax papers correctly you didn't have tax withheld at all (risky because if you end up owing, you have to pay, but if you're poor enough it's worth the risk).

It is a bit misleading because it's only looking at federal tax, and not all the flat rate tax we pay through the year (sales tax, gas tax etc)...but nobody talks about that.

 

[Vincent Vega]

Yes, the headline (47% of households owe no tax - and their ranks are growing) is misleading. They should indicate that it's only income tax they are talking. But the article clearly states that.

 

[MadelynIris]

Irvine,

I understand what you're getting at, but this is about "income tax". The reality is, much of the wealth owned by those folks wasn't derived through income, and the interest they pay is usually capital gains tax.

 

[A stor]

You pay $100, you get $100, net $0.

Not quite......I don't get back all of the taxes, which are paid.

 

[BVS]

Irvine,

I understand what you're getting at, but this is about "income tax". The reality is, much of the wealth owned by those folks wasn't derived through income, and the interest they pay is usually capital gains tax.

How are you defining "income"? Haven't investments always been defined as "income"? If it's in coming shouldn't it be defined as "income"?

 

[KhanadaRhodes]

It is a bit misleading because it's only looking at federal tax, and not all the flat rate tax we pay through the year (sales tax, gas tax etc)...but nobody talks about that.

i guess property taxes, sales tax, etc. don't count. i'll use my parents in this example since they own land and i don't. they get a decent chunk of their income tax back at the year, yet any time they even go grocery shopping, buying essential food, they have to pay 9.25% sales tax on everything. $100 a week seems to be average, so that's $9.25 in sales tax a week, or $481 a year. then there's property taxes, i don't even know how much they pay but we've got one of the highest tax rates in the country. then there's the gas taxes and such you mentioned...it's ridiculous. none of that gets reimbursed.

i'm not saying it should be reimbursed or anything. but obviously there are still taxes being paid.

 

[Vincent Vega]

Not quite......I don't get back all of the taxes, which are paid.

No kidding. Well, of course you don't. Neither is it been said in the article. The article focuses on federal income tax only. Nothing else. So any other tax you pay doesn't count in the equation. It doesn't say these households get every cent back they paid in taxes, it says they get every cent back they paid in income taxes.
Still they are making a minus. In the opportunity cost. If they hadn't had to pay the tax in the first place they might have earned an interest or consumed more goods.

 

[indra]

Yes, the headline (47% of households owe no tax - and their ranks are growing) is misleading. They should indicate that it's only income tax they are talking. But the article clearly states that.

Did they change the title since this thread was first posted?

I clicked on the link and the title is:

47% will pay no federal income tax

I think I need to hunt up some deductions! I'm in the group which according to this, the "vast majority" of doesn't pay any federal income tax, but I've had to pay some these last few years. In the grand scheme of things I'm not paying that much (because I don't make squat, that's why!), but if most other people making what I make (and even more) don't pay any federal income tax, I don't want to either, damn it!

 

[Vincent Vega]

Did they change the title since this thread was first posted?

I clicked on the link and the title is:





I think I need to hunt up some deductions! I'm in the group which according to this, the "vast majority" of doesn't pay any federal income tax, but I've had to pay some these last few years. In the grand scheme of things I'm not paying that much (because I don't make squat, that's why!), but if most other people making what I make (and even more) don't pay any federal income tax, I don't want to either, damn it!

After you clicked the link as well as in the text it says federal income tax. But if you take a look at the link here in the forum it just says tax. And apparently after that the "federal income" part wasn't being read as well.

 

[CTU2fan]

i guess property taxes, sales tax, etc. don't count. i'll use my parents in this example since they own land and i don't. they get a decent chunk of their income tax back at the year, yet any time they even go grocery shopping, buying essential food, they have to pay 9.25% sales tax on everything. $100 a week seems to be average, so that's $9.25 in sales tax a week, or $481 a year. then there's property taxes, i don't even know how much they pay but we've got one of the highest tax rates in the country. then there's the gas taxes and such you mentioned...it's ridiculous. none of that gets reimbursed.

i'm not saying it should be reimbursed or anything. but obviously there are still taxes being paid.

Well, they're only looking at federal tax, which is going to just be income tax and things like capital gains etc. Property, sales, gas taxes is all going to be either city, county, or state. Not that the article is misleading at all, because they're saying up front that they're looking at federal tax, but it doesn't tell the whole story either.

 

[Vincent Vega]

Well, it's federal income tax which narrows it down to just a single, specific tax. So in the sense of the federal income tax I would say the article tells the whole story.