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Tuesday, April 17, 2007

Who pays the federal income tax, and who does not 


Yesterday I put up a short little post about the "dirty little secret of tax evasion." Since your taxes are due today and it is probably too late to evade any taxes you weren't going to dodge anyway, you will be happy to learn that you are among the few and the proud!($)

If the tax forms you're filing this year show Uncle Sam entitled to any income tax, you increasingly stand alone. The income tax system is so bad, and increasingly reliant on a shrinking number of Americans to pay the nation's bills, that 40% of the country's households -- more than 44 million adults -- pay no income taxes at all. Not a penny.

Think of it this way. After dropping off your tax forms at the Post Office, you find 100 people standing on the sidewalk. Forty of them will be excused from paying income taxes thanks to Congress. Twenty of them, the middle class, will pay barely a thing. The 40 people who remain, the upper middle class and the wealthy, will pay nearly all of the income taxes.

Look at that crowd again and find the richest person there. That individual will pay 37% of all the income taxes owed by those 100 people. The 10 richest people in the crowd will pay 71% of the income-tax bill. The 40 most successful people will pay 99% of everyone's income taxes.


The article comes with the nifty graph at right.

Recognizing that one can never derive what ought from what is and that there is no a priori level of just taxation, what do you believe is the average citizen's view of the fairness of the Federal Income Tax, and do you think it is justified?

12 Comments:

By Anonymous Anonymous, at Tue Apr 17, 08:34:00 AM:

... and those 60% paying nothing, or next to nothing, include people who draw benefits from the government, either in the form of entitlements or credits.

... and those persons (let's call them the 40% in your example, who pay nothing) feel like they DON'T GET ENOUGH (!) from our Uncle.

It's just astonishing, and one of those mantras that the left have repeated enough to convince the unwashed masses of voters that, somehow, the the system's all wrong. They say we're not taxing those who have worked to achieve a strong income (rich = 200K plus to reach the top 2%, paying with the payers, about 60K) ... I disagree.  

By Anonymous Anonymous, at Tue Apr 17, 11:25:00 AM:

Well, I believe in a progressive federal income tax, and I paid a lot of it with respect to my taxable year ended 12/31/06. I can't say I'm exactly happy about it, but I'm not unhappy about it either. But if the income tax system were significantly more progressive, I'd get unhappy in a hurry.  

By Anonymous Anonymous, at Tue Apr 17, 12:21:00 PM:

Since doing my taxes for 2005, I've been using Turbo Tax.

Since I went back to school in 2005, with educational expenses, I paid no income tax for 2005 (I got a refund of all that was withheld from my 30-hr/wk job).

This year, when I did my taxes (I only worked my part-time job through May because of needing to go to school full-time to be able to graduate when I wanted to), not only did I get a refund of all income taxes withheld, I was also eligible for the Earned Income Credit. I was quite surprised with that, but I needed that extra money, since I'm underemployed since graduating.

I don't expect I'll be eligible for the EIC for 2007. I've got 2 interviews over the coming week, I expect to be fully employed soon enough. 2008 should be back to "normal"  

By Blogger Diane Wilson, at Tue Apr 17, 01:23:00 PM:

What tax policy should be is an open question for discussion, but for as long as I've been paying income taxes (30+ years), it's been a highly progressive tax system.

I really can't see the point in being upset that a progressive tax system results in progressive taxation. The system is working as designed! (within tolerance, or perhaps not)  

By Blogger sammy small, at Tue Apr 17, 03:16:00 PM:

I wonder whether this is based upon AGI or W2 & 1099 (before write-offs) reported income. I would bet AGI. And if so, the other method of indexing would change this graph quite a bit.

Also on the other article you linked, how does the IRS determine that it gets only 84% of collections. It seems that with all the internet based data available together with a little data mining, they could raise this fairly easily.  

By Anonymous Anonymous, at Tue Apr 17, 03:35:00 PM:

It's no longer news that American culture,taxes,laws,more and folkways are now officially totallly fucked up.

Multiculturalism,PC, open borders, dumbing down of education and on and on. We're this centuries British Empire of the last century.

Too bad but the great E ticket ride is at an end. Gravity on the slippery slope to a second rate power is giving us the big tug.

Or if you prefer the swirling in the bowl is increasing in speed and the vortex is tightening ... we all know it but there's just nothing cohesive enough anymore to stop it, so the Baby Boomers who began the swirl in the 1960's will just ride it down and take the nation with it. Too Too Bad.
Have another toke and some blow for your nose ...  

By Blogger Miss Ladybug, at Tue Apr 17, 04:05:00 PM:

Don't blame all the Boomers. My parents don't fit the stereotypical mold of the 60s activist. My father enlisted in December 1964 and my parents married in 1966. Daddy served until August 1991 and Mother raised us kids.  

By Anonymous Anonymous, at Tue Apr 17, 04:16:00 PM:

Great posting. A good showing of how many people's perceptions differ with reality.

There really ought to be a flat tax. Usually, the simple system is the best system, in my view.  

By Anonymous Anonymous, at Tue Apr 17, 04:47:00 PM:

How much INCOME TAXES do wealthy liberal demacrats pay? KENNEDYS,GORES, etc a good queation  

By Blogger RandomThoughts, at Tue Apr 17, 09:15:00 PM:

Personally, I wouldn't want to switch lives with the folks that are not paying any taxes. Somehow I doubt that the government cheese is something I would grill up.

How about the IRS giving refunds to illegal aliens?

"Mrs. Castillo figures they will get a $3,462 refund from the IRS, putting their total federal tax bill at $46."


http://moonsview.blogspot.com/2007/04/irs-helping-illegal-immigrants-receive.html  

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