Misconceptions and Realities About Who Pays Taxes

By Chuck Marr and Brian Highsmith
May 26, 2011

A recent finding by Congress’ Joint Committee on Taxation that 51 percent of households owed no federal income tax in 2009 <1> is being used to advance the argument that low- and moderate-income families do not pay sufficient taxes. Apart from the fact that most of those who make this argument also call for maintaining or increasing all of the tax cuts of recent years for people at the top of the income scale, the 51 percent figure, its significance, and its policy implications are widely misunderstood.

The 51 percent figure is an anomaly that reflects the unique circumstances of 2009, when the recession greatly swelled the number of Americans with low incomes and when temporary tax cuts created by the 2009 Recovery Act — including the “Making Work Pay” tax credit and an exclusion from tax of the first $2,400 in unemployment benefits — were in effect. Together, these developments removed millions of Americans from the federal income tax rolls. Both of these temporary tax measures have since expired.

In a more typical year, 35 percent to 40 percent of households owe no federal income tax. In 2007, the figure was 37.9 percent. <2>

The 51 percent figure covers only the federal income tax and ignores the substantial amounts of other federal taxes — especially the payroll tax — that many of these households pay . As a result, it greatly overstates the share of households that do not pay any federal taxes. Data from the Urban Institute-Brookings Tax Policy Center show only about 14 percent of households paid neither federal income tax nor payroll tax in 2009, despite the high unemployment and temporary tax cuts that marked that year.<3>
This percentage would be even lower if federal excise taxes on gasoline and other items were taken into account.

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http://www.cbpp.org/cms/index.cfm?fa=view&id=3505

good summary of points to toss back to the mouth breathers. Not that they'll read it.

That's what it really amounts to.

that when returns are compared apples to apples the rich receive the exact same exemptions as the poor and middle class. Therefore have the same exact amount of income that is not taxed. And that on average they received more deductions than low income filers thus more income is not taxed.

Consider that those with income of $250k or more have more than $64k of deductions which is more than the income of any low income family.

and then you are just amazed by all the shit you can claim to get out of paying taxes.

I can't even imagine how many deductions there are at 250K and above

Take your word for it.

Your time will come - it took me decades to get here

probably not. I peaked at about $95k. And I have no complaints about that.

Lots of states have sales taxes and as federal dollars have shrunk a lot of agencies charge for stuff that used to be free. Fees for licenses and other stuff.

The median HOUSEHOLD income in the US is $47,000. That's per household, not per person.

The famous "$250K/year is middle class" canard is ridiculous. Only 1.5% of households make that much or more.

Only 146,000 households (0.1%) bring in over $1.5 million

Only 11,000 households (0.01%) bring in over $5.5 million

The top 400 (like the Koch brothers) bring in over $87 million a year. The top, say, 100, or 50, have incomes that defy comprehension -- so huge that, in fact, a lot of our deficit could be erased merely by rolling back the bush tax cuts. Rolling back the Reagan tax cuts would erase it entirely and then some.