47% of all Americans paid no federal income tax in 2009. Including families of 4 earning $50K.

[sinkingfeeling]

http://www.msnbc.msn.com/id/36226444/ns/business-personal_finance/

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.

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.

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.

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.

[Renew Deal]

1. A family of 4 making $50K is pretty stretched

:shrug:

[boobooday]

4. Yeah, that's no lap of luxury in most places n/t

[FBaggins]

21. Depends on where they live.

It's anything from just-shy-of-desperate to reasonably comfortable depending on the local cost of living.

It's almost two and a half times the poverty level nationally.

[RaleighNCDUer]

28. Poverty level has nothing to do with it.

NOBODY who earns the poverty level (much less below it) can support himself. Just to make ends meet you need to make 2x poverty level.

Poverty level is rated low to artificially deflate poverty numbers - there are millions who make above poverty level who cannot make ends meet without charity.

[FBaggins]

30. Sure it does

Nobody said "you're doing ok if you're above the poverty level" or that the poverty level wasn't artificially low... we're talking about SOME people getting beyond the "stretched" line if they live in a low cost-of-living area and make two and a half times the poverty level.

Particularly if they aren't paying any federal income tax.

For the record, I supported a family of four in an above average C.O.L. area for about that much without debt (apart from a modest mortgage) and yet still saved a little for college/retirement. It wasn't so long ago that inflation explains the difference.

[taught_me_patience]

2. I think this is wrong

everybody should pay income tax... even if it is just 1% or 5%. I honestly believe that everybody has to have some form of "skin in the game".

[Captain Hilts]

8. They pay regressive Federal payroll taxes. nt

[Johonny]

13. exactly!!

people never seem to get that.

[Captain Hilts]

14. Because wealthy people for whom income taxes are more control the debate and media. nt

[sinkingfeeling]

19. And those terrible regressive payroll taxes pay for Social Security and Medicare.

It's no wonder the country is split when the entire burden of paying for government falls to just half the country.

[hfojvt]

23. oh, don't feel sorry for that half

they have about 75% of all the income and about 90% of all the wealth. So it's not totally unfair. In 2006 the bottom 75% had 31.8% of the income and the top 10% had 47.3%.

[sinkingfeeling]

25. What does that have to do with payroll tax deductions?

[hfojvt]

26. nothing, why?

You said this "It's no wonder the country is split when the entire burden of paying for government falls to just half the country." As if it is terribly unfair that the top 50%, which has 87.5% of the income, is paying close to 100% of the income taxes.

[sinkingfeeling]

31. OK. The article isn't talking about the top 50%, it's talking about all tax payers. Some don't pay

any income tax because of the child credit, exemptions, and other deductions. Some are in the top 10% and others aren't. I was thinking about the single person who doesn't have those credits and extra exemptions.

[hfojvt]

36. that is a good point

If I was working full time I would still be in the bottom 50% but I would be paying taxes. Families with kids get all kinds of government benefits that a single guy making $18,000 does not get. Heck, I could actually be paying taxes if not for the IRA deduction (and now the Obama tax credit too). Usually when I complain about it though, nobody takes my side. They will be all "that family of four is only making $12,500 per person" as if they have four times of the housing expenses or utility bills that a single person does.

[BeFree]

3. The Exxon family paid zip

[deaniac21]

53. I thine Dave and Beatrice Exxon had to pay a little.

[doc03]

5. I can believe that, my brother

gets an earned income credit every year this year he received $6000. He doesn't have a high paying job and has a daughter at home and pays child support for another one at his x's place. I'm not saying he doesn't need the help just stating the facts. I make up for it I am single make a good income and they tax the hell out of me.

[Captain Hilts]

6. Unless you earn more than $95K, you pay more in payroll taxes. nt

[sinkingfeeling]

15. What? On $66K, I paid $9945 in federal income tax, $5025 total SS & Medicare, and $3305 in state

income tax.

[Captain Hilts]

17. SS and Medicare are payroll taxes, not income taxes. nt

[sinkingfeeling]

20. So what does your prior statement about paying more into payroll taxes mean? When it's not a true

fact that only those making more than $95K pay more income taxes?

[Captain Hilts]

27. It is for most people. Payroll taxes as % of income have gone up dramatically

as a result of Reagan's tax 'reforms'. They are regressive, as are sales and other state taxes.

Income tax has not changed much.

[sinkingfeeling]

33. I still don't see how that can be. The lowest tax rate is 10% on income from $0 to $8375 (S).

The 'payroll taxes' for Social Security and Medicare total 7.65%. If self-employed that caps at 15.3%. Are you referring to the self-employed?




http://www.bargaineering.com/articles/federal-income-irs-tax-brackets.html
http://www.ssa.gov/OACT/ProgData/taxRates.html

[FBaggins]

37. That's on taxable income

The first many thousand dollars are not subject to income taxes (and the next several/many thousand are offset by deductions and/or credits. Payroll
taxes are due on the first dollar you earn.

[sinkingfeeling]

39. Really? Then please explain the 2009 IRS tax tables that show income taxes

being assessed on any income above $5 (line 43 of a 1040). http://www.irs.gov/pub/irs-pdf/i1040tt.pdf

[FBaggins]

42. Sure. Some figures as an example

(on edit - in direct response to your question - note on that table where it says "if Line 43 (taxable income) is -" It doesn't say "gross income")

Let's look at a plain vanilla family of four (two kids under 17).

If they don't own a house (or have other significant deductions), their minimum deduction is $11,400 (married filing jointly), plus they have four personal examptions (of $3,650) for another $14,600.

That means that no tax is owed on the first $26,000.

The next $16,700 is taxed at 10% - for a total of $1,670 owed. Except that the family has two $1,000 child tax credits... so they still don't owe anything.


Then starts the 15% tax bracket. The remaining $330 (of the $2,000 credit) would offset another $2,200.

Add it all up and before you talk about anything else (medical/charity/childcare/IRAs/etc deductions), you have no income tax owed on the first $44,900 in income.

But the payroll tax is due with that first dollar earned, and you've already paid about $3,500 to that (which comes out pre-tax, so that $44.9k number goes up some more).

[sinkingfeeling]

44. And that's exactly why 47% of Americans paid no federal income taxes. Why do so many of you have a

problem with SS and Medicare taxes? You probably have or had multiple family members accepting these programs.

[FBaggins]

45. Who said I has a "problem" with any of it?

I was merely explaining the parts that you didn't seem to understand.

I'm not at all surprised that roughly half of the country paid no federal income taxes. I have four kids, a house, retirement accounts, and a fair amount of charitable giving... I know that you can get WELL above that $50k figure and still not have a federal income tax liability.

[sinkingfeeling]

49. Thanks for the rational discussion. Up stream, it appears that some do lump all

deductions as income and were stating that most people making below $95,000 paid more into payroll taxes than income. I guess I always think in net income terms, because being a single person with a good income, I don't want to think about how nice it would be if I actually took home the gross income! However, I have been disturbed by the increasing number of credits and special deductions, because I think that by not paying into the federal pot people have lost the sense of the 'common good'.

In my son's in-law family, 8 out 8 paid no income taxes and all received EIC money. Yes, they're poor, but I can detect no desire to improve their lot in life. I'm so disgusted with my DIL because she's a junior in college this year and now wants to drop out and go back to her dreadful hometown in Oklahoma because of her mother's death.

Anyways, thanks.

[FBaggins]

41. Deleted

fit better as a direct reply.

[unpossibles]

7. I see this as a symptom that almost half of America

is currently experiencing some level of poverty or financial crisis.

I also don't know how much I'd believe something from the Tax Policy Center without looking more deeply into it.
http://www.sourcewatch.org/index.php?title=Brookings_Institution

[Captain Hilts]

9. Citizens for Tax Justice has the most information on this

http://www.ctj.org/

[iris27]

10. And it's somehow incorrect to think the government is behind

Social Security taxes and Medicare taxes? :eyes:

Even people who pay no federal income tax pay quite a lot of taxes, depending on where they live and what their habits are. Basing this on my own life (though I do also pay fed. income tax):

Federal Social Security tax (double if you're an 'independent contractor' or run your own business)
Federal Medicare tax (double if you're an 'independent contractor' or run your own business)
Federal gasoline tax
Federal cigarette tax (I don't smoke, but that's a fairly obvious one)
State income taxes
State sales tax
Local income tax
Local sales tax
Local property tax
Local business property tax (seriously, I run a very small side-business selling stuff online, and I have to pay property taxes every year on the $250 laser printer I bought for it)
Local real estate property tax

[NeedleCast]

11. Our Tax Code is so Brutally Messed Up

The tax burden is, more and more, falling on the middle class and ensuring that they become poor. Tax credits are a fairly terrible idea, and so are the tax breaks/loopholes for the wealthy.

The system needs to be massivly simplified, with a higher percentage (but not an extreme percentage) paid by the wealthy and a hard look at the seemingly endless number of tax credits that are being given out.

I am single, middle-class, no children, don't own a home. I could not possibly be paying more in taxes.

[fasttense]

12. BS and total BS

I make far less than $50,000 a year and paid income taxes. Barely got anything back. This was a very expensive year for me because I had a lower income and few deductions. This is pure BS.

And since when is Social Security and Medicare NOT income tax??????

Is it paid on property? NO. Is it paid on dividends? NO. Is it paid on sales? NO. Is it paid on every cent you earn through your income below $100,000? HELL YES! Did Ronnie Raygun and the RepubliCONS increase it on the middle class and decrease it on the uber wealthy? Hell Yes! Than it IS an INCOME TAX that the uber wealthy don't get to pay.

Oh by the way, Guess how much in taxes GE paid? Go ahead guess. The number is a big fat absolute ZERO.

[doc03]

16. Give GE a break man, I want my dividend

checks. Pick on somebody else.

[sinkingfeeling]

22. Are you married with 2 kids? If yes, then you need a new tax preparer!

[tjwash]

18. Oh jesus fucking christ on a cracker....not this shit again

First of all, this fucking hit-piece is written by the heritage foundation, and always shows up in some form every early April during tax time. It always uses cherry picked numbers and manipulated data, to support their agenda of drumming up a lynch-mob trying to defend the poor overburdened mega-corps that are always supporting the disgusting, smelly, riff-raff and working class welfare queens at the bottom of the U.S. garbage heap.

If you want to know what their agenda is, just google them.They are a bunch of randian fruitcakes that believe no corporation should ever pay any taxes at any time, but should be entitled to all of the corporate welfare that the government can dish out to them.

And...the Tax Foundation is not what their name claims to be either.

[sinkingfeeling]

24. It was written by the AP and the chart is from the Tax Policy Center. It doesn't say a word about

corporate taxes. What article did you read?

[helderheid]

35. check this quote from the article

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

[sinkingfeeling]

40. Yes, it's a quote, but not the author of the article.

[helderheid]

43. I understand that - it's still a BS statement.

[RaleighNCDUer]

29. "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,"

It is also not uncommon for people to be total morons, either.

[JuniperLea]

47. When I discuss such things with friends in other countries...

They lump all that together because they pay 30-35% in income taxes and get all those benefits from their governments. Health, check. Retirement, check. Disability, check.

[Zen Democrat]

32. In this society, an individual making $50,000 with no dependents is stretched! nt

[Lance_Boyle]

46. What society is that? The fashionable East Egg?

An individual pulling down $50K is doing well in most places, alright in the rest, and is "stretched" in none. Unless s/he is trying to live well beyond his/her means. In which case s/he has no right to complain as it's his/her own greedy-ass fault.

[JuniperLea]

48. If living in Los Angeles or New York...

The person making $50k annually is living in what most of us call a walk-in closet and eating Top Ramen and oatmeal. Yeah, that's greedy...

[Lance_Boyle]

50. I'm calling bull-to-the-shit on that, at least in NYC.

Unless you consider anything off of Park Ave to be "a walk-in closet" and anything not prepared in a restaurant kitchen to be "Top Ramen." 50K/yr in NYC is not bad off. Not even close.

[JuniperLea]

52. Dude... an "alcove studio" in Harlem is $1000 a month...

http://www.nycdwellers.com/apartments/detale.php?ap_id=431363&n=19&rec_start=0&action=

That's nearly half of the monthly take-home pay on $50k.

http://www.apartments.com/summary.aspx?property=102487.212&srank=1&subarea3=y&area2=y&state=ca&rgn1=20&helicon=1&rent_minimum=0&rent_maximum=99999&studio=1&am28=0&page=summary&prvpg=7&srt1=0.63&srt2=0.53&srt3=0.38

Almost twice that for 500 sq ft in downtown Los Angeles... and it goes up exponentially the closer you get to the beach.

And you were saying? What was that again? You were calling what now?

:eyes:

I have lived in LA all my life, and I have friends and colleagues in New York... I didn't just fall off your turnip truck.

[Redbear]

34. It's the same silly game they always play FIT v. federal income taxes

FIT (Federal Income Tax) is only one of the "federal income taxes" we pay.

While only half of us pay FIT, more than 75% of us pay federal income taxes (when you include FICA, Medicare, self-employment taxes, etc.) and almost everyone ends up paying some federal tax when you include federal non-income taxes such as gasoline taxes.

Articles like this are in no way newsworthy and are simply political propaganda.

[sinkingfeeling]

38. Then don't complain when it's posted that Exxon and GE paid no federal income taxes. FIT is the

only topic here. The article is about why dumping all types of taxes and withholding together is a reason that so very many Americans complain about being so terribly over-taxed in this age. Seems most here at DU agree and can't remember back when we really did have high income taxes.

[Gaedel]

51. 1962

I made $2,667.00. After standard deduction and dependency deductions for myself, wife, and baby, The remainder was taxed at 20% (which was the lowest tax bracket at the time). I think I paid about $120 in income taxes for 1962.

John F Kennedy ran on a platform of reducing income taxes. In 1963, they lowered the top rate from 91% to 70% and lowered the bottom rate from 20% to 14%.

I have never had a year when my income tax was zero. Of course, my income increased steadily year by year until 1979 when the bottom fell out.