Are You Still Paying Income Taxes?

[MetryOp]

Reprinted from NewsMax.com

Record Number of Americans Paying No Taxes
Jim Meyers, NewsMax.com
Wednesday, June 22, 2005

Amid all the talk that recent tax cuts have benefited only the rich, a new report reveals that they've actually aided lower-income Americans to the point that the number of filers paying no taxes at all has reached a record high.

"Despite the charges of critics that the tax cuts enacted in 2001, 2003 and 2004 favored the ‘rich,' these cuts reduced the tax burden of low- and middle-income taxpayers and shifted the tax burden onto wealthier taxpayers," states a report by the Tax Foundation, a nonpartisan research organization founded in 1937. Tax Foundation economists estimate that for the 2004 tax year, a record 42.5 million tax returns – one third of those filed - resulted in no tax liability after filers took advantage of credits and deductions.
The number of zero-tax filers has increased 42 percent in just four years.

Another 15 million individuals and families didn't earn enough income last year - $7,950 for individuals under 65 and $15,900 for couples - to be required to file a tax return.

A tax return often represents several people in a family. So when all the dependents of a filer are counted, about 120 million Americans – 40 percent of the population – are outside the income tax system, according to the Tax Foundation.

The 2003 tax cuts raised the value of the child tax credit to $1,000 and made it easier for filers with children to not only avoid paying taxes, but get a refund as well.

For instance, a married couple with three children and $40,000 in income can take a $9,700 standard deduction and $15,500 in personal exemptions, bringing their taxable income down to $14,800. They would owe $1,505 in taxes.

But with three children, they would get $3,000 in child credits, leaving them with no taxes owed – and a $1,495 refund check.

In 2004, the U.S. paid out about $33 billion in refund checks to low-income individuals and families who qualified for the Earned Income Credit, and $9 billion to those eligible for the child credit.

The Tax Foundation concluded: "These findings raise serious questions about the future of the U.S. income tax system. Are any future tax cuts, or even tax reforms, possible when the lion's share of the tax burden is increasingly borne by a shrinking pool of taxpayers who – at least on paper – appear to be 'upper-income'?"

[Nords]

Quote:

Originally Posted by MetryOp The Tax Foundation concluded: "These findings raise serious questions about the future of the U.S. income tax system. Are any future tax cuts, or even tax reforms, possible when the lion's share of the tax burden is increasingly borne by a shrinking pool of taxpayers who – at least on paper – appear to be 'upper-income'?"

Gosh, I'd hate to think that the U.S. income tax system is in danger of extinction. We'd better get those "upper-income taxpayers" to stop shrinking their pools!

TH, did you ever get the Tax Foundation to fund your studies?

[justin]

I'm guilty of having $0 of federal income tax liability last year. My wife and I live a solid middle class lifestyle in the southeast US. I couldn't believe that we owed nothing. This year, with the birth of our daughter, I think we will actually get a substantial refund from our uncle Sam (in other words, up to -$1,000 of fed tax liability). I think people who are similarly situated to me should pay something. I'm not in favor of increasing taxes, but I think the zero percent bracket is way too large, and there are too many loopholes, credits and deductions for everything under the sun.

Don't forget that us zero percent bracket taxpayers still pay our fair share of payroll taxes, state income taxes, state sales taxes, property taxes, etc. etc. etc.

[cute fuzzy bunny]

Quote:

Originally Posted by Nords TH, did you ever get the Tax Foundation to fund your studies?

They seem to be very well regarded by members of the govt...

[cute fuzzy bunny]

I dropped to nopay status for several years, courtesy of living mostly from cash reserves, not spending a lot, and the six figures in capital losses I'm still dragging around from 00...

Married filing jointly last year, we collectively paid less than we did single and separate (combined) the year before. I dragged down my wifes tax burden, which was nice.

This year, as she took six months off and we have an extra deduction kicking around, we may pay little to no income tax again...we'll see...