Is it time to join the 47% of Americans who pay no taxes?

[novaman]

This article just blew me away and got me thinking......

Nearly half of US households escape fed income tax - Yahoo! Finance

If I paid off my house, cut my work down to make less than 50K a year, assuming Obama's gonna take care of my medical needs, I could live on 4k a month and pay no federal tax! Doesn't sound too bad, does it?

 

[MuirWannabe]

Yes, that is how we are being incentivized. Be less productive and more dependent on the government. Dependence = less freedom though...not more.

 

[Gone4Good]

Yeah, sounds great until you find out that one of the things you need to do to join that club is have a bunch of kids.

 

[Gone4Good]

Yes, that is how we are being incentivized. Be less productive and more dependent on the government. Dependence = less freedom though...not more.

Expand Freedom! Raise Taxes!

 

[novaman]

Yeah, sounds great until you find out that one of the things you need to do to join that club is have a bunch of kids.

Yeah I qualify...3 kids and 2 of them under 17.

 

[Westernskies]

I don't think it takes a genius to figure out that a system where half the people pay so much in taxes that the other half pays nothing is not sustainable, much less fair.

 

[harley]

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.

I suspect most of those 47% are still paying a higher percentage of their income in taxes than the 5% that pay 95% of income taxes. I'm not happy about taxes, but I'm not planning on trading places with them. Where's that pamphlet on off-shore banks?

 

[audreyh1]

I don't think it takes a genius to figure out that a system where half the people pay so much in taxes that the other half pays nothing is not sustainable, much less fair.

It depends. If half the people are paying no taxes because they make too little income - then that seems fair.

Here it is ranked by AGI

Tax Year 2007 - Federal Income Tax

Percentiles Ranked by	AGI Threshold on	Percentage of Federal
AGI	Percentiles	Personal Income Tax Paid
Top 1%	$410,096	40.42%
Top 5%	$160,041	60.63%
Top 10%	$113,018	71.22%
Top 25%	$66,532	86.59%
Top 50%	$32,879	97.11%
Bottom 50%	<$32,879	2.89%

Note: AGI is Adjusted Gross Income
Source: Internal Revenue Service
from National Taxpayers Union - Who Pays Income Taxes?

According to this table, in 2007 those lower 50% of households filing taxes are making less than $33K! And those are the folks paying almost no Federal Income taxes.

Audrey

 

[Westernskies]

It depends. If have the people are paying no taxes because they make too little - then that seems fair.

Audrey

Who or what defines "too little" ?

IMO, fair is people paying their fair share, not some paying it all so others can pay nothing at all.

 

[audreyh1]

Who or what defines "too little" ?

IMO, fair is people paying their fair share, not some paying it all so others can pay nothing at all.

I added a the table from 2007 above. "Too little" is the households making $0-$33K. That's pretty low.

"Fair Share" can be established in many different ways. In the US we don't make people pay Federal Income taxes on their first dollar, but rather some minimal income threshold is met before taxes start to become due. It's been that way for a long time.

It might seem outrageous until you realize how many households fall into that low income category. 50% of them!

And yes, credits are heavily weighted towards how many dependents are in the household. It's also been that way for a long time.

Even for flat tax proponents there is some minimal threshold before taxes are assessed.

Audrey

 

[John Galt]

"You cannot lift the wage earner by pulling down the wage payer" - Abraham Lincoln

 

[MichaelB]

Gee - another thread on taxes. Will this get more intense as we close on tax filing day?

Only one post from me - once again to remind readers how convenient it is to ignore the 15.3% of taxes already paid on wages by those that "pay no taxes".
Gosh - that's a higher rate of taxes on wages than all the people making hundreds of millions in compensation but paying capital gains rates of 15% because they get paid in stock.

 

[target2019]

Many people who pay no income tax have raised families of wage earners. In their elderly years they pay little or no taxes. It's convenient to lump millions of citizens into a statistical category, but it obscures much.

 

[Gone4Good]

I don't think it takes a genius to figure out that a system where half the people pay so much in taxes that the other half pays nothing is not sustainable, much less fair.

Agreed, but to assume they "pay nothing" you have to exclude social security taxes, medicare taxes, property taxes, state income tax, local income tax, and sales taxes. But aside from that, 47% "pay nothing".

 

[donheff]

I am amazed at how envious so many of us seem to be of people who are far less well off than us. I wouldn't trade places with a "normal" family that qualifies for no taxes in a month of Sundays. I might go for being one of the rare rich guys who avoids all taxes, but they are pretty rare and it might offend the Marxist social justice sentiments I picked up at church

 

[skyvue]

Title is mis-leading. They do pay "taxes", just not federal income taxes.

 

[Leonidas]

I am amazed at how envious so many of us seem to be of people who are far less well off than us. I wouldn't trade places with a "normal" family that qualifies for no taxes in a month of Sundays. I might go for being one of the rare rich guys who avoids all taxes, but they are pretty rare and it might offend the Marxist social justice sentiments I picked up at church

I'm not envious of them at all - I've been down there.

I'll quote BO on this one:

What we have to do is to take a look at our structural deficit, how are we paying for government, what are we getting for it, and how do we make the system more efficient? Everybody is going to have to give. Everybody is going to have to have some skin in the game.

I know these people pay sales tax, RE tax, etc. But if they're not paying FIT they have no skin in the big game. They are just recipients of the largess of the [-]House of Lords in D.C.[/-] Congressional representatives who are buying their votes. If all they're doing is waiting for Uncle Sam to mail them a check they have no reason to be concerned about responsible government, they're just watching the wheels spin on the government's slot machine waiting for three cherries to pop up.

And so, my fellow Americans: ask not what your country can do for you - ask what you can do for your country.

I don't care if they kick in $5, but everybody needs to pay something. Government's job is not to take care of people, it is to focus and concentrate our efforts in accomplishing things we need done, but can't do as individuals or small communities.

 

[Gone4Good]

I am amazed at how envious so many of us seem to be of people who are far less well off than us.

"Those lucky SOBs. I'll show them. I'll stop working and cut my gross by $50K so I can save $10K in taxes."

But won't that leave you $40K poorer?

"Yeah, but I'll pay less taxes."

 

[Gone4Good]

I know these people pay sales tax, RE tax, etc. But if they're not paying FIT they have no skin in the big game. .

And somehow we still ignore the 15% in Social Security tax to pay for "the big game".

Part of the problem is how these taxes are paid. Nobody has to file a form paying their Social Security tax, they just pay it either through lower wages or a type of "garnishment". If folks had to write a check for the SS taxes owed on April 15, no one would be claiming these aren't real taxes.

 

[skyvue]

"Those lucky SOBs. I'll show them. I'll stop working and cut my gross by $50K so I can save $10K in taxes."

But won't that leave you $40K poorer?

"Yeah, but I'll pay less taxes."

And buy a house I can't afford to save additional money on taxes!

 

[Leonidas]

Part of the problem is how these taxes are paid. Nobody has to file a form paying their Social Security tax, they just pay it either through lower wages or a type of "garnishment". If folks had to write a check for the SS taxes owed on April 15, no one would be claiming these aren't real taxes.

I agree. Too many taxes are hidden and billions are sucked up with not very many people noticing.

And somehow we still ignore the 15% in Social Security tax to pay for "the big game".

I don't disagree that the 47% not paying FIT aren't taxed in other ways like SS. It's that most of them just ignore all of those strange deductions on the stub and look at what the payout is on the check. What I want is for them to fill out the damn forms for FIT and realize that they are being taxed, and maybe start to wonder what the heck those people in Washington are doing with their money.

Besides, SS taxes come with the message "It's just a little bite now, but we'll take care of you in your old age so you won't have to worry about doing that for yourself."

 

[Eagle43]

This thread comes just as I've decided to spend the day [-]trying to get out of[/-] preparing my taxes. I always wait until the last minute....

 

[Gone4Good]

It's that most of them just ignore all of those strange deductions on the stub and look at what the payout is on the check. What I want is for them to fill out the damn forms for FIT and realize that they are being taxed, and maybe start to wonder what the heck those people in Washington are doing with their money.

Absolutely. If everyone had to write a check at the end of the year to pay for the cost of their government, people would think harder before voting for benefit increases (or foreign wars, or tax cuts for those with the highest incomes).

But I've also read that many people compare their net paycheck to their gross and assume the difference is taxes. But the difference also includes health insurance, dental, 401(k), etc. Many people may assume they're getting taxed more than they are.

 

[Martha]

But if they're not paying FIT they have no skin in the big game. They are just recipients of the largess of the [-]House of Lords in D.C.[/-] Congressional representatives who are buying their votes. If all they're doing is waiting for Uncle Sam to mail them a check they have no reason to be concerned about responsible government, they're just watching the wheels spin on the government's slot machine waiting for three cherries to pop up. I don't care if they kick in $5, but everybody needs to pay something. Government's job is not to take care of people, it is to focus and concentrate our efforts in accomplishing things we need done, but can't do as individuals or small communities.

What evidence do we have that lower income people are any less concerned about responsible government? Poor people, middle class people and rich people vote the way they vote based on a wide variety of reasons. You have poor Republicans and rich Republicans. Same with Democrats. You have a large group of people who never even vote. To say those who don't pay federal income taxes as a group are just waiting for the three cherries to pop up is a very insulting view of that group.

Skin in the game means you have something to lose. That is why you have people make down payments on homes and cars. The concept is a stretch when applied to taxes as our taxes don't buy any sort of control. I had no more control over my representatives when I paid six figures in income taxes than I did last year when I paid none. And in both cases I held the same political positions.

 

[Leonidas]

Absolutely. If everyone had to write a check at the end of the year to pay for the cost of their government, people would think harder before voting for benefit increases (or foreign wars, or tax cuts for those with the highest incomes).

In the words of CFB: DING! DING! DING!