Fact: between 38% and 47% of households have no federal income tax liability. I found reading the below information on this statistic very interesting. While all workers pay into social security and medicare, not all workers have an income tax liability. So as we have been sitting here over the past months, listening to all the LimbaughAssBagger and Beck-erButtNut followers, it is interesting to see that many of them actually contribute nothing to the funding of the operation of our country.
I see two potential solutions, some sort of minimum flat tax (for those above the poverty level) so that all contribute to our countries operation, or only those of us that are in the other 53% have a right to have a say or to complain in how the non-social security and non-medicare funds are spent. As an alternative, a national sales tax instead would be even more fair because it is a consumption tax, but this is a political non-starter.
I need to qualify this entry by stating that I have been a life-long Republican up until the last year, where I have now firmly entrenched myself in the Independent camp. I am a fiscal semi-conservative and a social liberal. I used to be very fiscally conservative, but now believe that there need to be some limits and responsibility for those of us fortunate enough to be middle class.
NEW YORK (CNNMoney.com) -- Most people think they pay too much to Uncle Sam, but for some people it simply is not true.
In 2009, roughly 47% of households, or 71 million, will not owe any federal income tax, according to estimates by the nonpartisan Tax Policy Center.
Some in that group will even get additional money from the government because they qualify for refundable tax breaks.
The ranks of those whose major federal tax burdens net out at zero -- or less -- is on the rise. The center's original 2009 estimate was 38%. That was before enactment in February of the $787 billion economic recovery package, which included a host of new or expanded tax breaks. The issue doesn't get a lot of attention even as lawmakers debate how to pay for policy initiatives like health reform, whether to extend the Bush tax cuts and how to reduce the deficit.
The vast majority of households making up to $30,000 fall into the category, as do nearly half of all households making between $30,000 and $40,000.
As you move up the income scale the percentages drop.
Nearly 22% of those making between $50,000 and $75,000 end up with no federal income tax liability or negative liability as do 9% of households with incomes between $75,000 and $100,000.
Of course, income taxes don't tell the whole story. Workers are also subject to payroll taxes, which support Social Security and Medicare.
When considering federal income taxes in combination with payroll taxes, the percent of households with a net liability of zero or less is estimated to be 24% this year, according to the Tax Policy Center's estimates.
A key reason why there is a zero-liability group at all is because the U.S. tax system is progressive. Those who bring in more money pay more than those lower down the income scale to support government functions such as national defense and social safety nets like Medicaid for those in need. That progressivity can be dialed up or down.
"Some think it's too progressive. Some don't think it's progressive enough," said Roberton Williams, a senior fellow at the center.
President Obama falls into the latter camp. He has proposed increasing the income tax burden on families making more than $250,000 and individuals making more than $200,000, while offering new measures to reduce the tax bite for most Americans making less. I personally believe that this bar is set to high. I think that those making $75K or above need to continue to pay their fair share, not to be more progressive.
One of Obama's proposals is to extend the 2001 and 2003 Bush tax cuts for everyone except high-income tax filers, which was the group that derived the most benefit from those cuts. As a result, under Obama's budget, he would keep the ranks of the non-payers higher than they would otherwise be. I think we should let the tax cuts expire so we have less of a burden on future generations.
I think that there is a lot of confusion, or non-information about how our tax structure and funding of our government is achieved. It is easy to complain, but to really dig in and understand your part and your contribution, and to make your voice be heard accordingly is one of the rights we have in this country. Unfortunately, the right to complain is also one the is used very frequently, frequently drowning out the facts.
I have to wonder...how many of those teabaggers bearing signs that say "Not with MY money!" and "Hands off my cash!" are exempt from paying taxes other than Medicare and Social Security? Hmm.
ReplyDeleteI agree Ken, we need to broaden our net to bring in taxes, without unduly burdening the lowest income bracket. I like the idea of a federal consumption tax. If you don't buy it, you don't pay it.
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