Nearly half of US households escape fed income tax
Apr 7 05:38 PM US/Eastern
By STEPHEN OHLEMACHER
Associated Press Writer
FILE - In this April 5, 2010 file photo, Internal Revenue Service Commissio...
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.[/b]
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.
Is it just me, or are there too many tax credits, top to bottom? How 'bout this: You can choose a flat tax with no deductions/credits.....or keep your current tax structure the way it is.
“Poor Al Gore. Global warming completely debunked via the very Internet you invented. Oh, oh, the irony!” -Jon Stewart
Typically, a thread is a starting point for discussion, via the poster making a 'point' that others can either agree with, or take exception with.
What is your 'point'?
Quote:
Quote:
Is it just me, or are there too many tax credits, top to bottom? How 'bout this: You can choose a flat tax with no deductions/credits.....or keep your current tax structure the way it is.
“Poor Al Gore. Global warming completely debunked via the very Internet you invented. Oh, oh, the irony!” -Jon Stewart
I think a flat tax like the VAT would be good if they abolished the income tax. That way you pay if you spend. I would only agree to it though if there were a constitutional amendment to remove the ability of government to deficit spend. I would pay 20% instead of all the nonsense. Well as a business owner I am sure I would pay less than they want now.
R.W.E. of the J.B.O. wrote:What that article fails to point out is that a family of four with income lower than $50K/year will actually recieve money they didn't pay. This is redistribution. It is taking from one group and giving to another. To anyone not familiar with these numbers, it should be making you scratch your head to think about how the Bush tax cuts are constantly touted by the Democrats as being for the rich, and hurting the poor and middle class.
Intriguing. So it is your contention that this family would receive a tax refund for tax they didn't pay? If yes, can you shed some more light on how this works in practice?
Here's the light.
Not same situation, but works the same.
I work with 2 baby mammas. They have 2 + 3 kids respectively. They make less than I do, pay less in taxes out of their checks, yet when tax season rolls around, they receive refund checks of well over 3-4k. Way more than they paid out it federal taxes.
.
“Poor Al Gore. Global warming completely debunked via the very Internet you invented. Oh, oh, the irony!” -Jon Stewart
Quik...Your example sucks. They do
not get more back than they
paid in. If you'd like, run this past an actual tax accountant and wait for the smile to curl on his lips as he realizes what a right-sack swinging looney you sound like. Abso-fcuking-lutely hilarious!
LOL, besides...you guys act as if the current administration is somehow re-writing the fudamantal rules regarding taxation. It's ALWAYS been the case that the higher income bracket pays more taxes. Holy sh!t, you treat it as if it's some Revelation about Left-theft! Classic Chicken (Little) Sh!t.
WTF. How about you find something that MATTERS to whine about for a change? It's always this shell game of funky math that never actually works. Get off your rapidly-secretary-spreading keyboard-pounding A55es and go do something REAL to make a difference instead. This ain't working.
Hold on. Wait one minute. Do I understand this right...you are pissing and moaning about
married couples with children receiving tax credits?
PLEASE tell me this isn't the extreme right's latest pisspot about "what's wrong with Leftie Government."
How many fans and new voters do you think THIS one's going to get in the GOP boat,
attacking familes with children?
For fcuk's SAKE, man...this is the backbone constituency of American life, and you somehow think that attacking them is going to...wait, what did you think attacking them is going to achieve anyway?
The tax credits apply to the taxes paid in OTHER tax years. They are
NOT "getting back more than they paid in." Holy sh!t. You wingnut numbskulls will fall for anything. Desperation is your only reamining tool, apparently.
I just cannot even BELIEVE the defecation that spews from your mouth.
R.W.E. of the J.B.O. wrote:This has been proven again and again, as well as the fact that the rich still end up paying a huge portion of the tax burden even when their rates are lowered.
PRECISELY why it's such a non-issue. But that's never stopped you from screaming about obviations before. So....fcuking...WHAT. You ain't making one iota of difference whining about it here.
You don't like it? Too...fcuking...BAD. Move somewhere where the rich don't pay more taxes than the poor, or go change it here (good luck with that, as it's been the status quo for the better part of a century or longer, and somehow the nation, AND the rich, not only survived, but prospered).
This is the epitome of lameness, arguing about theoretical "worst case" constructs here. Write your congressman. Go participate in...well, SOMETHING. Bouncing this crap off me, or others here, achieves less than nothing, for it wastes your time. I thought you'd already acknowledged as much. Something brought you back, and it sure isn't the call to duty. More like the call to DOODY.
Yes, take the pissy, whiney shots. When I take away your fuzzy math, that's all you have left. Here you are doing exactly what you said you wouldn't, because you couldn't miss the chance to try and soothe your tortured soul...maybe your world got sh!ttier again, and so you had to seek an outlet, . Did it work? Do you feel better now?
I'm sorry the side you picked is under such fire right now. Sure, it sucks to be on the extreme team, especially when you are losing the battle of public opinion. Try to make yourself feel better by taking it out on me. You can fool yourself (and I'm not even sure on that!), but you sure
can't fool me.
Ever wonder why you are all alone when you do this? I don't. No one cares, Quik. They all stopped caring a long time ago. I just enjoy making you squirm. I realized long ago I can't make you think.
here's the last 4 bits from the AP article posted above.
"[color=purpleBut 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.
]
The received more in refund than they paid in taxes. Quite simple. Liberals complain about rich not paying their fair share....blah blah blah.... I guess they only believe the rich and upper middle class should be shouldering that burden.
.
“Poor Al Gore. Global warming completely debunked via the very Internet you invented. Oh, oh, the irony!” -Jon Stewart
Seriously. A family of four living on $40K a year. Does that sound like some kind of extravagant lifestyle? Break it down. That's $3000 a month for four people to live, eat,and get to and from work. Clothing, shoes, rent, utilities, school supplies, food, probably bus passes too, because no WAY is that enough for car payments too.
You think they have nice cars? You think they can afford a mortgage? That's about as spare an existence as it GETS.
You self-righteous "friends of the rich" try to make it sound like these people contribute NOTHING to society, and just take, take, take. You suck for being so selfish and arrogant. They are the American Dream waiting to happen. Two working parents that make little more on salary than they could draw on welfare. Paying taxes on every purchase they make, every utility bill they pay, every penny they spend, and you want to make sure thay have ZERO money left to enrich their childrens lives. Ever occur to you that if they don't catch a small break like this, they'll just get on the dole and suck off the teat WAY MORE?
Fcuk you self-righteous a55holes. Really? Sit there and don't even TRY to think about how it feels to have that kind of responsibility, and live from paycheck to paycheck wondering if your kids will have rags to wear to school so they can be made fun of. You make me SICK.
You didn't strike a nerve. You just showed that you are 100% without a clue about anything but yourselves. This is why people like you remain lonely single men, many who will never "get" what it's like to be part of a loving family unit. You'll die in front of your keyboards, never having had the chance to love and cherish others because you've hardened yourselves so much to the world around you.
I'm not suprised that you "used" to be part of a family. Apparently, you couldn't handle it. And if you stil are part of that family...they have my endless sympathy. They sure aren't going to get any from YOU.
He used to make the 40k. He's still married with the kids. Just because someone has a family and doesn't make a lot of money, should not exempt them from shouldering part of the tax burden. To believe otherwise is to believe "from each according to his ability, to each according to his need". People can live off $3000 a month...comfortably too. They might live in a poorer area of town and drive a used cavalier, and pack their own lunches for work, no morning starbucks run....one landline and no cell phones...kinda like how my grandparents raised my parents. It can be do e easily if people don't get buried in high interest car loans and collections companies.
As a single man, it irks me that baby mamas, earning the same or less $ than me, pay no federal income taxes at all. And don't go one about how expensive kids are to raise. Having a kid is like buying a dog. It's gonna cost you X amount of money to take care of it. I that isn't in your budget, then perhaps a box of Trojans is.
“Poor Al Gore. Global warming completely debunked via the very Internet you invented. Oh, oh, the irony!” -Jon Stewart
The low income people don't typically own legal businesses, and therefore, do not create legal job opportunities.
Lobs like to say, "rich should pay still more, so we can give it to the poor, who will spend it on the rich mans goods"
Non-Lunatics believe "lowere the rich mans business taxes, and he'll hire an extra worker, who will earn a paycheck, and spend it on rich mans goods"
when you are only concerned about unfair policies that affect someone else, you are settling into a mindset of "it can't happen to me".
When you allow govt to erode someone else's liberty, you are enabling them to to remove yours next.
“Poor Al Gore. Global warming completely debunked via the very Internet you invented. Oh, oh, the irony!” -Jon Stewart
I have no shame in what I will post because I followed the law to get these numbers:
filling status M9 (married with 2 kids) on the W4 worksheet this is what came up. It really doesnt matter what you claim along the year because when you do your taxes at the end of the year you will either owe or have over paid and the filling will reflect that.
Okay so 2009 I grossed 37,081
I payed medicare 469.34
I payed social security 2,006.83
I payed Federal tax ZERO
TOTAL: 2,476.17
My non taxable deductions:
I payed 401k 1,079.45
I payed Medical insurance (CIGNA) 4,712.94
TOTAL: 4,712.94
My NET pay for 2009 was 28,812.59
I recieved a check from the IRS in the amount of 5,215.00
I fillied married filling jointly, and had an adjusted gross income of 31,289
I also claimed my 2 children whom live with me and my wife.
WTF did I do to get 5K back?????
Did I take the money...........hell yeah I accepted it because that was the figure it gave me back. Should I have recieved such a large return after paying Zero in federal taxes NO, I was expecting to owe about 200 or so bucks or at least break even with my child tax credits.... The system is flawed and needs to be revamped.
PS I also live in TX were the median income is 37K so im not "poor" for say as some one making 37K in other parts of the US. Texas also has no state income tax.
I pay 972.00 for rent in a 2007 built 2 story house right around 2,100 sft
I OWN a 2004 corolla S
I OWN a 1995 Isuzu Rodeo
I have minimal debt, and my other expsense total 500.00 a month.
Lookee Lookee ^^^
“Poor Al Gore. Global warming completely debunked via the very Internet you invented. Oh, oh, the irony!” -Jon Stewart
