Nearly half of America paid no tax

Just realised the link doesnt work, sorry.




http://finance.yahoo.com/news/Nearly-half-of-US-households-apf-1105567323.html?x=0&.v=1


WASHINGTON (AP) -- Tax Day is a dreaded deadline for millions, but for nearly half of U.S. households it's simply somebody else's problem.

About 47 percent will pay no federal income taxes at all for 2009. Either their incomes were too low, or they qualified for enough credits, deductions and exemptions to eliminate their liability. That's according to projections by the Tax Policy Center, a Washington research organization.

Most people still are required to file returns by the April 15 deadline. The penalty for skipping it is limited to the amount of taxes owed, but it's still almost always better to file: That's the only way to get a refund of all the income taxes withheld by employers.

In recent years, credits for low- and middle-income families have grown so much that a family of four making as much as $50,000 will owe no federal income tax for 2009, as long as there are two children younger than 17, according to a separate analysis by the consulting firm Deloitte Tax.

Tax cuts enacted in the past decade have been generous to wealthy taxpayers, too, making them a target for President Barack Obama and Democrats in Congress. Less noticed were tax cuts for low- and middle-income families, which were expanded when Obama signed the massive economic recovery package last year.

The result is a tax system that exempts almost half the country from paying for programs that benefit everyone, including national defense, public safety, infrastructure and education. It is a system in which the top 10 percent of earners -- households making an average of $366,400 in 2006 -- paid about 73 percent of the income taxes collected by the federal government.

The bottom 40 percent, on average, make a profit from the federal income tax, meaning they get more money in tax credits than they would otherwise owe in taxes. For those people, the government sends them a payment.

"We have 50 percent of people who are getting something for nothing," said Curtis Dubay, senior tax policy analyst at the Heritage Foundation.

The vast majority of people who escape federal income taxes still pay other taxes, including federal payroll taxes that fund Social Security and Medicare, and excise taxes on gasoline, aviation, alcohol and cigarettes. Many also pay state or local taxes on sales, income and property.

That helps explain the country's aversion to taxes, said Clint Stretch, a tax policy expert Deloitte Tax. He said many people simply look at the difference between their gross pay and their take-home pay and blame the government for the disparity.

"It's not uncommon for people to think that their Social Security taxes, their 401(k) contributions, their share of employer health premiums, all of that stuff in their mind gets lumped into income taxes," Stretch said.

The federal income tax is the government's largest source of revenue, raising more than $900 billion -- or a little less than half of all government receipts -- in the budget year that ended last Sept. 30. But with deductions and credits, especially for families with children, there have long been people who don't pay it, mainly lower-income families.

The number of households that don't pay federal income taxes increased substantially in 2008, when the poor economy reduced incomes and Congress cut taxes in an attempt to help recovery.

In 2007, about 38 percent of households paid no federal income tax, a figure that jumped to 49 percent in 2008, according to estimates by the Tax Policy Center.

In 2008, President George W. Bush signed a law providing most families with rebate checks of $300 to $1,200. Last year, Obama signed the economic recovery law that expanded some tax credits and created others. Most targeted low- and middle-income families.

Obama's Making Work Pay credit provides as much as $800 to couples and $400 to individuals. The expanded child tax credit provides $1,000 for each child under 17. The Earned Income Tax Credit provides up to $5,657 to low-income families with at least three children.

There are also tax credits for college expenses, buying a new home and upgrading an existing home with energy-efficient doors, windows, furnaces and other appliances. Many of the credits are refundable, meaning if the credits exceed the amount of income taxes owed, the taxpayer gets a payment from the government for the difference.

"All these things are ways the government says, if you do this, we'll reduce your tax bill by some amount," said Roberton Williams, a senior fellow at the Tax Policy Center.

The government could provide the same benefits through spending programs, with the same effect on the federal budget, Williams said. But it sounds better for politicians to say they cut taxes rather than they started a new spending program, he added.

Obama has pushed tax cuts for low- and middle-income families and tax increases for the wealthy, arguing that wealthier taxpayers fared well in the past decade, so it's time to pay up. The nation's wealthiest taxpayers did get big tax breaks under Bush, with the top marginal tax rate reduced from 39.6 percent to 35 percent, and the second-highest rate reduced from 36 percent to 33 percent.

But income tax rates were lowered at every income level. The changes made it relatively easy for families of four making $50,000 to eliminate their income tax liability.

Here's how they did it, according to Deloitte Tax:

The family was entitled to a standard deduction of $11,400 and four personal exemptions of $3,650 apiece, leaving a taxable income of $24,000. The federal income tax on $24,000 is $2,769.

With two children younger than 17, the family qualified for two $1,000 child tax credits. Its Making Work Pay credit was $800 because the parents were married filing jointly.

The $2,800 in credits exceeds the $2,769 in taxes, so the family makes a $31 profit from the federal income tax. That ought to take the sting out of April 15.

Internal Revenue Service: http://www.irs.gov

Tax Policy Center: http://www.taxpolicycenter.org
 
This was debunked in the local newspaper today. It is more or less true that about half of us pay no income tax, but few of us escape sales tax, payroll tax, social security withholding, alcohol/tobacco/gas taxes and property tax.
 
In the end when everyone's total tax bill is determined we should look at how progressive or recessive the taxes are. Most taxes are recessive. this means that at higher income levels the total percentage of taxes paid declines. Any flat income tax proposal has always been incredibly recessive.

Are recessive taxes fair? I have never thought so.
 
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In the end when everyone's total tax bill is determined we should look at how progressive or recessive the taxes are. Most taxes are recessive. this means that at higher income levels the total percentage of taxes paid declines. Any flat income tax proposal has always been incredibly recessive.

Are recessive taxes fair? I have never thought so.

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So youre saying that someone who makes say 5 million a year, pays less taxes than someone who makes 500,000 a year?

Flat taxes would mean EVERYONE, yes even welfare puppies, will pay a flat tax. I have heard estimates that a flat 10% tax, no discounts, deductions, etc would make the country run effortlessly, and that a 5% flat tax, again no deductions etc, with a stricter budget and reforms would work as well.
 
Your first example is taxes on goods, clothing, food, sales, liquor etc. Poor examples Tom. Never thought I would see a wiki entry as your "proof"


You make 50,000 this year and are in the 35% tax bracket, while someone who made 70,000 this year is in th 50% tax bracket. Why should that person be taxed more than you? And how about the welfare family who received 20,000 of our tax dollars and wasnt held responsible for the upkeep of our country, through tax payments? Fair?

Isnt it FAIR to be taxed the same, say 10% across the board?
 
Wiki isn't offered as a proof. The definition is much easier to read coming from economists than arborists.

To me, a progressive tax is much more fair than a regressive tax.

If it takes $10k for one person to live at the poverty level and they have to pay 10% in taxes they're left with $9k...$1k short of poverty.

Someone who earns $100k is left with $90k...or ten times poverty level. That isn't fair to me.

What does a low income family have to keep up? How much of 'our country' do they benefit from? Do they really need the police force of the military to protect 'their' investments oversees? If a family only has enough to pay for basic food/shelter then what benefit do they gain from having part of their taxes being used to maintain National Parks or wildlife refuges?

No...it isn't fair to have a flat tax.

I believe that the middle class has much more incommon with low income/poverty than the upper class. A far greater proportion of the MC income goes to support 'our country' than the upper class.

I don't care to take the time to go into more math and reasoning to show why I feel progressive taxes make more sense. After spending time in Econ 101 listening to Walter Heller [read the whole article]:

http://www.nytimes.com/1987/06/17/obitua...ml?pagewanted=1

and my life seeing how disparate the tax system is, progressive makes more sense than recessive.

If 81% of the arborists agreed on something it is very likely to be a sound principle or practice wouldn't you say?

From wiki...follow the footnotes for the sources:

In most western European countries and the United States, advocates of progressive taxation tend to be found among the majority of economists and social scientists, many of whom believe that completely proportional taxation is not a possibility.[18][19] In the U.S., an overwhelming majority of economists (81%) support progressive taxation.[18][19]
 
Fair is fair. Taxing someone outrageously more, because they worked hard and made more isnt fair. Im not talking millionaires here Tom, how about the city Arborist who may make 75k a year, and his wife stays at home. He works in a big city, high costs of living, and is taxed 50%!!! Thats HALF of his check gone every year, because its FAIR to do? Doesnt sound very fair to me.

Of course European countries are going to spout off about progressive being the way to go, they HAVE to pay for their socialist economies, and huge welfare programs somehow.


In conclusion, its not OK to take 10% of someones salary who receives welfare benefits, and is poor, but it is OK to take 50% of someones salary who is middle class? Fair?
 
It seems fair to me BB. If you want to make more money thats your peragotive, the government makes more too. Why should someone who doesnt want to live a high lifestyle have to pay. If there is one thing about the tax system that does seem fair to me, it is that the more you make the more you pay.

Your argument is like there should be a standard admission fee to live. Like you pay 10 dollars to get into a ball game.

BB, if everyone just paid 10% this country would be broke. It is not worth it for the government to try and collect 10% from some one who earns 10,000. that person knows it too and wouldn't pay and the gov would spend more than 1000 trying to get 1000.

Logistically your plan would be a complete failure. If you feel like you contributing too much to society, just make less.

One thing that you also dont see is that money grows exponentially so getting richer when you have a lot of money is a lot easier than getting richer when you have no money.
 
No...the current system is NOT fair! It is a regressive system. So we agree BB. Not just income tax...sales tax is about THE most regressive tax around. Like any complex discussion this can't be broken into sound bites. I learned about economics in a five-quarter credit college class and a life time of paying taxes. It's hardly going to be easy to get into the fine points in a discussion forum.

A truly progressive tax system sets up a base, generally built on a multiplier of poverty level, where no taxes are paid. Then there are incremental levels of taxation as income goes up. Deductions and modifiers are reduced so filing is easier.

The chance of our system ever changing to a progressive income tax is nil. The spin masters would be able to work up such a frenzy about how unfair it is for people with more to pay more. The 'more' income level is quite high too.

Is it fair that a ticket to watch a movie is $8 but waiting a while and renting it from Netflicks or even a little longer to watch it for FREE on Hulu?

This is a metaphor so lets not spin off.
 
you should be proud of yourself that you pay a lot of taxes. That,in reality also makes you a more important figure in our society.
 
You may disagree ? but this has worked!!Arthur Laffer. the Laffer curve.check out his book, "the end of prosperity,( how Higher taxes will doom the economy")if we let it!!
this is actually what has been proven to work . and he invented the Laffer curve , check it out!! great stuff
It is supply side economics in which I believe, most libs do not!!
Why do we group the rich together as all bad and vilify them??!!some decent rich folk are the reason many others have work!!! who buys planes,who goes out to dinner,who goes on vacation ,who buys yachts? don't people work at the places where that stuff is made and serviced Etc..Think about the tree work that could be done at some rich persons house!!
use your freakin heads people!!! it is not some moral high ground to demonize the rich or to say government should do our tithing and or philanthropy for us......do it yourself..... NOW THERE IS A CONCEPT!
 
Income tax, mmm...
As you all can see I am not a citizen of the US.
About two years ago on Dutch national television we saw a documentary about US federal officers hunting down people that did not pay their income tax. In that documentary was pointed out that there was no law in place that states that US citizens should pay this tax. No law at all.
Is anyone of you here able to reproduce the law that suggests you have to pay income tax?
 
treebing and Tom,

If the rich person pays 10% in taxes, and then has a banner year and makes an extra millionlets say, hes paying MORE taxes than he normally would, 10% more! The ore you make the more you pay under this plan as well. I thought it was simple math?

TaiTree,

I must read that book, thanks for the tip!



Treespotter,

even other countries document how awful our system is. Thats funny!
 
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This was debunked in the local newspaper today. It is more or less true that about half of us pay no income tax, but few of us escape sales tax, payroll tax, social security withholding, alcohol/tobacco/gas taxes and property tax.

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In Oregon, some folks get state tax money back when they paid none. I'm not sure how many.

We don't have a sales tax here.

And folks who ride bicycles or the bus don't pay gas tax, unless its in the fare. But for years, I was paying Oregon a TMSET tax. In other words, businesses were forced to pick up the tab because riders are not paying their share to fund the public transportation.

So for the more part, the article is more true than debunked.

When volunteering some pruning to a grade school a few weeks ago, the volunteer mentioned that the next elementary school to the east, was like 80% reduced and free lunches.

So in that school, you see many families relying of other tax payers to feed their kids lunch 5 days a week.

Then there is FREE ZOO Tuesday or something. What happens, is admission is free one day. So a bunch of folks who can afford to pay, and some who can't, wait until Tuesday or whatever day, and others pick up the tab.
 
Well, how about there be a requirement that companies pay a living wage not something that leaves anyone below the poverty line. I've yet to see that happen. Those that have worked hard to make their business grow and prosper have a hardworking staff to thank for that in most cases. Therefore those people should equally share in the company's success and not be left in a situation where they require government largesse. Then a flat tax would make sense.

Unfortunately, too many companies rely on, even demand government subsidy to locate and operate in any given jurisdiction while at the same time structuring the wage rates and working hours such that a portion of the workforce cannot actually live on the income knowing that the government will also then provide some form of welfare or healthcare to them. That is just another way of gaining corporate welfare without it being advertised as such.
 
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