Nearly half of American tax filers will pay no federal income taxes

[cheapdate]

Some 76 million tax filers, or 46.4 percent of the total, will be exempt from federal income tax in 2011.

Who are the 76 million non-tax paying filers? 41 million of the filers exempt from federal income tax are in the lowest income quintile, meaning they make less than 80% of the country. Those in the bottom quintile have incomes of less than $16,812. 22 million filers who won't pay income tax this year are in the second-lowest quintile ($33,542 or less)

The non-income-taxpaying population in these groups is largely a result of Republican tax policies. The earned-income tax credit (EITC) is the main reason those with low incomes are largely exempted from federal income taxes. Originated by Gerald Ford, it was expanded by both Ronald Reagan and George H.W. Bush as a better way to help the working poor than raising the minimum wage, which they believed would increase unemployment.

A little more than 20 years ago, as he signed into law the tax bill expanding the Earned Income Tax Credit, President Ronald Reagan hailed it as "the best anti-poverty, the best pro-family, the best job creation measure to come out of Congress."

Of the remaining non-tax payers, 9 million nonpayers are in the middle income quintile ($59,486 or less). Another 1.9 million are in the second-highest quintile ($103,465 or less), and some 443,000 are in the top quintile ($103,467 or greater).

The Tax Policy Center breaks down that last number a bit further: There are 78,000 non-paying units in the top 95th to 99th income percentile, 24,000 in the top 1 percentile, and 3,000 in the top one-tenth percentile.

How much money would the US government raise by collecting $1,000 each from the 41 million filers in the lowest quintile? Easy, $41 billion.

I have no problem with the EITC. Maybe there are some reasonable adjustments that could be made to it, I don't know. But I am perfectly OK with it in principle.

I am perfectly OK with giving a break to the millions of Americans who make up the working poor. The revenue the federal government would get from taxing their tiny income is chump change.

I agree in principle with a progressive tax structure in which higher earners pay more for the cost of operating the government. In the first case, they can more easily afford it. And in the second case, they have benefited more from the conditions that a stable, functioning, national government provides that allows them to earn so much in the first place.

I agree in principle with measures designed to prevent the concentration of wealth, such as the estate tax and capital gains taxes. These measures prevent the formation of an aristocracy; a privileged class of idle rich like in old Europe. In today's economy, where the annual earnings of those few at the top of the financial sector are counted in tens of millions of dollars, or more, the families of wealthy Wall Street bankers would become our new aristocracy. Maybe they already are our new aristocracy.

The nature of concentrated wealth tends towards concentrated political power as well. I believe it is unrealistic thinking to believe that concentrating extreme wealth would lead to greater benefits for anything other than a small few. The natural tendency over time in this situation is for the wealthy to grow more wealthy and the less wealthy to grow even less so.

Maybe we should just let the Republicans have their way. Abolish Social Security and let the nation's old folk fend for themselves and beg in the streets or work until they die as they did before Social Security was created. Take away food stamps and all nutrition programs so that the working poor, and everyone else can see what REAL poverty looks like. Get rid of the Clean Water Act (like the house just voted last week to do) and let Alabama fight it out with Tennessee and Georgia over who can dump their shit into Alabama's rivers, like they did before 1972.

[indurancevile]

1. I think this is false.

[alarimer]

3. Yes, it certainly doesn't include the payroll taxes everyone pays for SS.

Among other things. Not to mention astronomical sales taxes (which are by nature regressive but technically not federal taxes).

[cherokeeprogressive]

14. The title says "Federal Income Taxes". n/t

[Obamanaut]

33. It is true that all (unless paid 'under the table') workers are subject to

payroll taxes for SS. Anyone who buys a cola from a convenience store will pay a sales tax. Or a shirt from Penny's. Gas for the car has taxes, which all purchasers of that gas pay.

There are taxes in the form of fees that all who have driver's licenses pay. Yes indeed, most people who buy or use anything pay some form of tax.

It is *also* true that there are many who have no FEDERAL INCOME TAX liability at all, no federal income tax burden. And, many of those even get 'money back' thanks to the Earned Income Tax Credit.

The OP did say federal income tax.

[Obamanaut]

6. Which part? nt

[Speck Tater]

2. Yup. It's them damn poor people who are the cause of all this countries problems.

:sarcasm:

(So long. It's been good to know ya.)

[cheapdate]

7. I think you may be missing my point. Did you read it all?

[Speck Tater]

9. I recognize the formula used in this post:

"Hey guys. I'm one of you. I really believe in what you believe in but... by the way, you're all full of shit."

You can't masquerade as one of us if you are going to come right out and feed up right-wing propaganda. We are not as stupid as the people you are probably used to feeding this crap to.

[cheapdate]

19. Do you agree with my actual point that:

"I am perfectly OK with giving a break to the millions of Americans who make up the working poor. The revenue the federal government would get from taxing their tiny income is chump change.

I agree in principle with a progressive tax structure in which higher earners pay more for the cost of operating the government. In the first case, they can more easily afford it. And in the second case, they have benefited more from the conditions that a stable, functioning, national government provides that allows them to earn so much in the first place.

I agree in principle with measures designed to prevent the concentration of wealth, such as the estate tax and capital gains taxes. These measures prevent the formation of an aristocracy; a privileged class of idle rich like in old Europe. In today's economy, where the annual earnings of those few at the top of the financial sector are counted in tens of millions of dollars, or more, the families of wealthy Wall Street bankers would become our new aristocracy. Maybe they already are our new aristocracy."

That's not right-wing propaganda. That's what I believe.

[LanternWaste]

48. The one does not deny the other.

"That's not right-wing propaganda. That's what I believe."

The one does not deny the other. :shrug:

[cheapdate]

51. So, just right wing propaganda, huh?

I confront a popular right-wing meme head on and try to oppose it with basic progressive principles. What's your answer?

How would you respond in a discussion with a conservative when they bring up this often repeated meme: "The damn liberals want the government to do everything so half of them sit at home and live off of my money!"

Would you just tell them that's right wing propaganda? Is that the extent of your argument?

[Obamanaut]

34. Here's some more info on 'no federal income tax burden'

Here’s a link from 2006

http://www.taxfoundation.org/research/show/1410.html

"Number of Americans Paying Zero Federal Income Tax Grows to 43.4 Million"


Here’s one a bit more current. Many low income workers benefited from the ’make work pay’ tax credit. With that tax credit now gone, the numbers will likely change a bit. But the fact remains that many tax filers have no FEDERAL INCOME TAX burden at all.

http://finance.yahoo.com/news/Nearly-half-of-US-households-apf-1105567323.html?x=0

"Nearly half of US households escape fed income tax"

[Erose999]

41. Yep, the poor are have seized control of 8% of this country's wealth. We must stop them from

accumulating more.

[trackfan]

4. Somehow, that is complete crap.

We've made less than that in several different years, and have always had to pay income tax, albeit not much in some of those years. Then, you
throw in the SE tax, and you're really screwed.

http://martinigod.com/blog.htm

[cheapdate]

5. Forgot link...

http://economix.blogs.nytimes.com/2011/06/28/who-doesnt-pay-federal-income-taxes-legally/

[October]

10. Article by Bruce Bartlett - senior policy roles for Reagan and GHW Bush...

Bruce Bartlett held senior policy roles in the Reagan and George H.W. Bush administrations and served on the staffs of Representatives Jack Kemp and Ron Paul.

[Drale]

8. Unrec for right wing propaganda /nt

[shanti]

11. yes, a right wing meme

one more unrec

[cheapdate]

12. Did you read it all?

The point is that I'm getting tired of right-wingers crowing all the time about how "You know half of the country doesn't pay any income taxes", or talking about their "fair tax" nonsense.

These are the facts as best as I can discern them. Who doesn't pay income taxes? That's what I wanted to know.

As it turns out, they are sort of correct. But as usual, they have put no thought into the details of that bare statistic.

That's what I tried to do. Does taxing households making less than $16,000 a year make any sense? No.

[LiberalFighter]

25. How many don't have their first $16k of income not taxed.

Personal exemptions will be $3,700 per person.
Standard deductions:
unmarried or filing separately will be $5,800.
married filing jointly will be $11,600.
head of household will be $8,500.


A married couple filing jointly without children would have a minimum of $19,000 exempted from the federal tax. Lower, middle, and upper income families would all have a minimum of $19,000 exempt from federal taxes. Maybe another way of putting it would be that 100% of all taxpayers that are married and filing jointly without children or other dependents would have a minimum of $19,000 exempt from federal taxes. This applies to any variation. There is a minimum that each variation has exempt. With those in the middle and especially the upper income brackets having more exempt because of itemized deductions instead of the standard deduction.

Single filers would have a minimum of $9,500 exempt regardless of gross income.
Head of household would have a minimum of $15,900 exempt regardless of gross income.

[cheapdate]

27. That's a little confusing...

Forgive me, but the double negative ("Don't...not have) is proving difficult for me to cipher out.

I think the point is that household incomes below $15,900 are completely exempt. Which as I said, is good and fair. I don't know how the earned income tax credit works, but it too is a good thing.

The problem is not at the bottom of the tax brackets, it's at the top. I work as an engineer. I'm married with 2 kids and a house. My taxes have never been lower since I can remember. My effective rate is about 9%. I'm glad to be able to pay my share.

[LiberalFighter]

36. The point is that those in the upper tax brackets have the same income

that is not taxed as those in the lower income. Those in the upper income brackets will have more income that is not taxed than those in the lower income brackets when they itemize their deductions.

It's as if they want those that don't make enough pay taxes on income they don't have because those in the upper income brackets are taxed for it.

[cheapdate]

37. Thanks.

The usual conservative-liberal argument goes something like this.
Conservative: "Liberals want the government to do everything while half of the population sits on their lazy asses living off of my money!"
Liberal: "You're a pawn and you don't even know it!"

I think we have to find the best arguments for making people think about why progressive taxes are fair, and what are the consequences of concentrated wealth and the concentrated political power of the wealthy.

[LiberalFighter]

45. I would think that 2 points being

that everyone in each filing status and same exemptions have the same income that is not taxed. And that those in upper income have more income that is not taxed compared to lower income tax filers.

[cheapdate]

47. That would be the difference in marginal and effective tax rates.

An important point in a truthful discussion.

[LiberalFighter]

49. The point I am making doesn't matter about marginal or effective tax rate.

The point is that regardless of income level everyone has the same amount of income that is not taxed based on their tax filing circumstances. The more income the more likely to have more income that is taxed but also to have more income that is not taxed. And for them to argue that over 50% of tax filers don't pay taxes doesn't hold water when those with higher incomes don't pay taxes on that same first amount of income either.

[cheapdate]

50. Yes, I understand.

I used the term 'marginal tax rate' incorrectly, but I understand what you're saying. I think that 'statutory tax rate' might have been the correct term for what I meant (but I'm not even sure about that to tell the truth.) I think maybe the simple answer to those who say that "You know 50% of these lazy asses don't pay anything and live off of my money!" is that most of those people don't make shit to start with and cutting tax rates for millionaires isn't going to change that equation.

[cheapdate]

17. How is a defense of my belief in the progessive tax structure

qualify as right-wing propaganda? How does my arguing for maintaining the estate tax and capital gains taxes qualify as right wing propaganda?

How is my argument against taxing low income workers right wing propaganda.

I'm really surprised about that accusation.

[Historic NY]

13. How many Corporations pay nothing but get tax credit refunds?

[PSPS]

15. This is right wing propaganda

If your definition of "Federal Income Tax" is solely that which is due on a 1040-EZ or 1040-A for a wage earner, you're not counting the payroll (FICA) tax, which all hourly workers pay regardless of how much they earn. They pay this through payroll deduction, so it's not reported on their tax form.

Also, Obama's stimulus included tax credits that temporarily wiped out income tax liability for some.

The true number of households that pay no federal income tax is really about 10%. ANd this doesn't include other taxes, such as state/local/sales.

But this doesn't nullify the vast untaxed wealth that is in the hands of the uber-rich. The top 400 households have wealth we can't even imagine. The fact the the country's economy is in the toilet largely because of their tax breaks underscores this fact.

A good debunking of this right wing lie can be found here:

http://www.nytimes.com/2010/04/14/business/economy/14leonhardt.html

[cheapdate]

18. Of course people pay other taxes.

That is not my point at all. I looked into a common right-wing talking point and offered my opinion on the earned income tax credit, progressive taxes, the concentration of wealth, and general right wing stupidity. The NYT article says: "The 47 percent number is not wrong." OK, it's not wrong. So how do I answer that?

[TheKentuckian]

16. I've NEVER not NET paid, no matter how little I've made. Gotz to have kiddos to dodge the magic

bullet.

[Incitatus]

20. I will not feel resentent for the Americans who make the least amount of money.

They are not the reason this economy is so fucked up. No matter how much the real owners want us to think and take it out on the other half of pawns in their game.

[kestrel91316]

21. Half of this country makes frickin' slave wages. Yup. Mission (almost) Accomplished.

[napi21]

22. There's something wrong with the data. I can tell you that in 2009,

the year my husband retired, (and I wasn't working) our total income was $29,300. and we paid income taxes. Yes we got a refund of the diff between what we owed and what had been withheld, but we did pay income taxes none the less. We have no children living at home and our only dependants are our two little dogs and they're not deductible! The other thing that is not calculated on that data is the USE by the Feds of the money wit held from everyone's paycheck until they finally gt their refund sometime in April of the following year. Stated or not, there's a cost to the tax payer and a benefit to the govt for using all that money.

When I worked, I was an accounting manager and I know how easy it is to make numbers prove almost anything you want them to prove. There's info missing from that explanation rendering the entire premise inaccurate and misleading.

[cheapdate]

24. The right-wing talking point is out there,

I'm hearing it all the time. I tried to digest the raw numbers from the government myself, but it was too complicated. The numbers I used came from HuffPo, which got them from the NYT, which got them from the Tax Policy Center. If the numbers are incorrect, I would appreciate it if anyone could provide the correct ones.

My point, which almost everyone here at DU seems to be missing, was to provide an answer to this ubiquitous right-wing talking point. If we accept that the numbers are accurate, then roughly 41 million households, or 69% of the oft quoted "half of Americans who are not paying anything", as the right wing would put it, are working poor. Really poor.

There's nothing wrong with the bottom of our tax structure. The problem is the 73,000 filers at the top who pay nothing. Not to mention corporations.

[napi21]

30. I didn't say the numbers wre wrong. I said the data was incomplete

thereby rendering it inaccrate.

Let me put it this way. Let's say John earns $80,000/yr and he doesn't pay any income tax. That statement doesn't include John's expenses which were $92,000/yr therefore he actually LOST $12,000! see, John earns most of his money via a small business that is so new, he's still filing as an individual. Do you see what I mean? The number $80,000 wasn't wrong, but simply an incomplete picture of his circumstances. That's what I mean by inaccurate info.

[Jack Sprat]

23. Wait a second. You have some 25%

rate payers identified as non-payers. There is a vast difference in 0% and 25% of one's income going to taxes.

[cheapdate]

26. I'm not an accountant. I don't know what that means.

There is a significant difference between 0% and 25%. What is a rate payer?

[Jack Sprat]

28. I can't believe the numbers.

{Of the remaining non-tax payers, 9 million nonpayers are in the middle income quintile ($59,486 or less). Another 1.9 million are in the second-highest quintile ($103,465 or less), and some 443,000 are in the top quintile ($103,467 or greater).}


How could this be true unless they are using tax loopholes or hiding their money someplace? Are you saying that we have this many cheaters from these categories?

[cheapdate]

29. I don't know the answer.

High medical expenses probably account for more than a few. My goal was to try to respond to a right-wing talking point. The numbers came from HuffPo, which got them from the NYT, which got them from the Tax Policy Center. If you have more accurate number, I'd love to see them.

[Jack Sprat]

46. If those numbers are even close to correct,

then it's no wonder we have such a revenue shortfall and we might do better to eliminate the tax breaks and tax havens that allow so many to avoid paying their share in all categories except the lowest earners.

[Scuba]

31. The "unreccers" apparently never got beyond your subject line....

and should be ignored in any case.


The RW has been chanting this meme for a while now, giving their minions one more hollow talking point. Your analysis is helpful.



I would appreciate it if somone who understands taxes could put together a simple, verifiable, reply to the RW meme. Something on the order of " so you're saying the half that pays n% of the taxes is undertaxed since they also take n + y% of the income?".


Bottom line: until capital gains taxes are included in the tax discussion, we'll always have a regressive system.

[OneGrassRoot]

32. +1 n/t

[RandomKoolzip]

35. Those damn Lucky Duckies again!

"Maybe we should just let the Republicans have their way" is something that should never be written on this fucking board.

[cheapdate]

38. I'm not the first to express that sentiment.

It's a rant borne of frustration. However, in states like Minnesota, Ohio, and New Jersey it has in fact come to pass and there is the tiniest sliver of a chance that it may work out to the Democratic party's advantage.

[IndyPragmatist]

39. Wow, the responses here are pathetic

Just because it is a RW talking point, doesn't make it false. It is completely accurate. When used by the RW, they often frame it to make it seem as if half of Americans don't pay any taxes, but that is false. The statement "half of American tax filers don't pay any federal income tax" is true. When they use this, its almost always spun. But it's still true.

Seriously, I bet if the Republican Party said "1+1=2" we would have an entire thread about how wrong they are.

[Lex]

40. If we had sane economic policies that would help raise so many out of poverty, then

it would be a win-win. A rising tide lifts all boats.

[cheapdate]

43. There are demonstrable societal benefits

in protecting and supporting low wage earners; in making sure that they have access to good education, clean, safe places to live, etc. Some benefits are tangible, such as lower rates of crime and greater economic activity, and some of the benefits are less tangible but equally as desirable, such as communities that are generally cleaner and more pleasant places to live.

I think that Democrats were on the money, back in 2008 when they had a coherent and consistent message of strengthening the middle class.

[Yavin4]

42. If You Want The Poor To Pay More in Income Taxes, Pay Them More in Wages

Of course the poor don't pay much in income taxes. That's because THEY DON'T MAKE ANY MONEY WHATSOVER.

Read your own post, "Those in the bottom quintile have incomes of less than $16,812". You try living in America on an annual salary of $16,812. Go ahead. Find any where in America where you can live on that.

Let's look at the second lowest quntile, $33,542 or less. Again, I challenge you to find any place in America that can live on that wage. Any place without significant government assistance, which btw, gets cut by the federal and state governments.

I have a solution. Let's cut the taxes on the top 1% of wage earners and eliminate corporate taxes if, and only if, they hire American workers and pay them well above $33,542 a year. Agree?

[cheapdate]

44. No, I don't agree.

Taxes on the upper brackets should be raised, not lowered. The marginal corporate tax rates are generally reasonable, but the details and shenanigans that allow clever corporations to game the system and avoid paying must be fixed.

The Democratic house under Nancy Pelosi introduced a significant number of bills that would have reigned in off-shoring of jobs, offshore tax havens, required the government to purchase American made products, etc. etc. There were some very good, constructive bills. I had a list at one time of the bills that supported American jobs and the middle class.

Unfortunately, none of the bills were able to pass the house. And now of course, the house is lost. The Democrats lost the battle of ideas to the US Chamber of Commerce and their allies, who sold the public on their "free market" snake-oil; i.e. "Our nation and economy is stronger when business can freely move production wherever labor and other costs are the cheapest." The average conservative had no idea (and still doesn't) that their party is fighting to allow corporations to continue to gut American jobs and manufacturing.

I'm sorry, but I may not have made my point as clear as I could have in my post. I'm well aware of how small a salary of $16,000 is. The argument in my post was in support of the principle of the progressive tax structure and in support of more, not less support for low wage earners.

Please read it again in its entirety.