9 Responses to “Most of us pay taxes … Some of us don’t” »»

1. anon2
   Comment by anon2 | 02/25/10 at 4:29 am

   Almost half of all Americans pay no federal income tax. I am pretty sure it’s not the the top half. Finding one rich family who gamed the system doesn’t seem likely to be representative of who actually pays taxes. I think the IRS publishes more representative reports that show where the money comes from (it ain’t the poor).

2. dong
   Comment by dong | 02/25/10 at 8:36 am

   I hate it when people bring up the fact that half all americans do not pay federal taxes. First off it’s less than half, probably closer to 40%.

   More importantly, most of these people are not people who have never or never will pay taxes. They are people like my parents who are retired and earn hardly anything and therefore don’t pay taxes. They paid their fair share in the past. They are also like my friends who are graduate students, scraping by. They will pay taxes someday. Being gainfully employed, and well paid, I’m happy to pay my taxes so that people at different stages of life aren’t unduly burdened.

3. Mike
   Comment by Mike | 02/25/10 at 10:59 am

   “most” of those people are elderly or students? Care to point to a source for that statement, or is it just your assumption that conveniently makes your point?

   And just because someone has low income, you think they should pay zero taxes? If they bear none of the tax burden, what incentive do they have to vote for an efficient government? After all, it’s not their money they government is spending. A substantial base of citizens who do not share in the tax burden is not a good thing. It encourages a dependency population.

4. pain in the
   Comment by pain in the | 02/25/10 at 11:53 am

   Mike,

   Do you have a source to show that he is wrong? I’m really curious on who makes up this demographic

5. dong
   Comment by dong | 02/25/10 at 1:19 pm

   I don’t know exactly what the student and retiree breakdown, but let’s use age as a proxy.

   http://faculty.ucc.edu/egh-damerow/u_s_demographics.htm

   About 12.5% of US Population is over 65.

   Another 14.5% is between the age of 15 and 24. I would only assume 40% of the people between the age of 15 and 24 are students who might file taxes for about 6%.
   Then another 14.5% are between the ages of 2% and 34, and of that group I would assume 10% are students who might file taxes, which makes another 1.45%.

   That gives about 20% of the US population that are likely students or retirees which is near 50% of the 40% of the U.S. that don’t pay taxes. Given that any given time there’s usually another 5% of that are unemployed because they got laid off, we have a rather large percentage that may not pay taxes. The fact is that many people will not pay taxes at different stages of their lives.

   I never said that I don’t think people should pay taxes, I think the use of the 40 or 50% statistic is way off base. It’s statistic intended to rile people up and stir them up into thinking there’s huge class of people taking advantage of the system which is just not true. That’s snapshot and not true representation of who’s paying taxes. It’s ok for people to pay more taxes at times when they can, and not pay them when they can’t. Why squeeze blood from a stone?

6. Matt
   Comment by Matt | 02/26/10 at 4:57 am

   Dong – the 40%-50% stat relates to households with zero tax liability, not individuals. It is likely that a decent chunk of that 15-24 demographic live in a household containing people in the 30-65 range. Agree with your point that people do indeed go through stages of life where they may have zero tax liability, but make up for it at other times.

   I don’t think this debate is a matter of people taking advantage of the system. Rather, it is more of an indication that the tax code in this country really needs overhaul. A lot of people I talk to have very little comprehension of the tax system…I am always suprised when people have no idea what their effective tax rate is, or do not even realize that we have a graduated tax rate in this country.

7. Mike
   Comment by Mike | 02/26/10 at 5:15 am

   Dong –

   Why are you including 100% of the elderly and student population in your buildup of the non-taxpaying population? Are you asserting that NO students or elderly pay no taxes? I highly doubt that.

   The 40% number is based on “tax units” which already aggregates people who are claimed as dependants by others (many students fall into this category, as well as the elderly) and excludes people who are not required to file a return and don’t.

   Of the 300 million or so in our US population, there’s only 151 million of these “tax units” (households who should file a return, plus some who do not need to file but do anyway), so many of the people you consider are already factored in.

   http://www.taxpolicycenter.org/numbers/displayatab.cfm?DocID=2408

   I’m all for the government providing support for people who are in need, but to try to “hide” it in the tax system rather than making it visible is pretty shady in my opinion.

   And I’m not sure why you assert that none of this country’s students and the elderly pay taxes (you counted 100% of them as being part of the no taxes pool) – even “very little” is something, and the statistic is based on those with zero or negative tax liability. So students and the elderly, who make little and therefore pay little, are not all part of the population that pays zero or has a negative tax liability.

   Here’s an interesting article on the situation, and a very revealing quote:

   “The high percentage of people paying no federal income tax is not the result of the levy’s tax function. It is caused almost entirely by Congress’s insistence on using the tax system to deliver social benefits.”

   http://taxvox.taxpolicycenter.org/blog/_archives/2010/2/25/4466208.html

   If the government is going to provide those benefits, it should do so directly where it can be seen and measured. And ALL people should be reminded each year about how their money pays for our government. They might insist on more fiscal responsibility as a result.

8. dong
   Comment by dong | 02/26/10 at 5:59 am

   Mike, I’ll be first the agree that the tax system needs an overhaul. Obviously talking about the elderly and students, I made simplifying assumptions. There are plenty of people who are between 25-34 who pay no taxes. Young families with children, beginning their careers. I agree it’s fairly easy to be in situation if you live in tax state, and have other deductions not to pay federal taxes.

   We could argue all day about how we can slice up the tax units, but my basic point is that it’s unfair to lump all these people who don’t pay taxes as bunch od deadbeats which is just political posturing. I don’t believe most them are. Not to say there aren’t deadbeats, but citing that 40 or 50% is generally done incediary manner rather than a productinve one. The tax system needs reform, but we don’t need class warfare.

9. Mike
   Comment by Mike | 02/26/10 at 6:48 am

   Dong, I agree that people who don’t pay tax should not be characterized as “deadbeats” and I’m not sure that’s the intent behind the statistic. Those people are simply doing exactly what they’re supposed to do under the tax code and I doubt anyone else would do any different.

   The problem is that for an increasing percentage of the population, taxes are no longer an immediate concern. This dulls their focus on our government’s fiscal polices. At the extreme, this fosters a dependency culture where people look to the government as a source of income rather than a cost to be borne. And the larger that population becomes, the more of a problem it is.

   I am NOT saying all non-taxpayers ignore government fiscal policy, but with each increase in the percentage of non-taxpayers, the population who cares about fiscal issues decreases which is not a good thing. In my opinion, the best way to focus people’s attention on the waste and inefficiency of government is to have them share the burden of paying for it, even if it’s only a de-minimis amount. Our citizens should have some “skin in the game” so to speak, and right now that’s not happening.

   Proponents of “big government” are frequently interested in minimizing peoples understanding or perception of how much it really costs. That’s why there are so many social programs hidden in the tax code, so people focus on the “net” rather than the “gross”.

   I think when people focus on the percent of the US that pays taxes, it’s out of a desire to highlight this practice.

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