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61% of Americans paid no income taxes in 2020
- dpeck 5y agoCompared to what percentage in 2019? More clickbait headlines without context. Yes, the answer is in the article, it’s up 38%.
- phdelightful 5y ago"up from 76 million — or 44% of all taxpayers — in 2019." - TFA
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- HumblyTossed 5y ago> The pandemic and federal stimulus led to a huge spike in the number of Americans who either owed no federal income tax or received tax credits from the government. According to the Urban-Brookings Tax Policy Center, 107 million households owed no income taxes in 2020, up from 76 million — or 44% of all taxpayers — in 2019.
- c22 5y agoIt is disturbing that there are enough people making just above what the IRS considers the poverty line that a couple thousand dollars of tax stimulus should have such a profound effect.
- jeffbee 5y agoA federal check for a couple thousand bucks has been life-altering for millions. American poverty is real.
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- creddit 5y agoThe 1% is so evil, they’re now the 61% and paying no taxes still!
- bingohbangoh 5y ago"But our tax system is inherently regressive!!1" Never understood how people can say that with a straight face knowing that more than _half of all Americans don't pay taxes_.
- adgjlsfhk1 5y agoIt's regressive because pretty much every tax other than income tax is regressive. the 61% that didn't pay income taxes spend all the money they make, so they pay a much higher percentage of their income on sales tax, property tax (through rent), social security, gas taxes, tolls and stuff like that.
- adgjlsfhk1 5y agoAlso having capitol gains taxed at a lower rate than income is regressive. Rich people aren't rich because they work. They're rich because they have money to invest. Our tax system should benefit people who work for a living over people that just pay other people to turn their money into more money.
- bingohbangoh 5y agoYou're taxed when you earn the money already. Taxing again at the point you deploy it is double taxation. Many countries don't tax capital gains at all because of this fact. Moreover, you want people to deploy their capital in the economy. Hiking taxes on capital gains would massively disincentivize people. Unlike other taxes, capital deployment is a risk based economic activity: if you raise taxes, people will be less inclined to invest it on risky ventures as opposed to keeping it in very safe assets (e.g. bank accounts or real estate).
- Aunche 5y agoThey're only regressive if you're not considering what people are getting out of their taxes. Gas taxes pay for highways. Social security taxes pay for your retirement. The US has one of the most progressive tax systems in the world. The only benefit we seem to get out of it is that the poor and middle class end up spending more money on consumer goods. In the US, property taxes are so low such that they are uncorrelated with rent. The properties with the lowest tax rates thanks to Prop 13 also have some of the highest rents.
- Spivak 5y agoThis article is doing some really funny accounting. Like I get it but it's also conflating two things that most people probably don't. The headline should be: 61% of Americans have a federal income tax burden which is less than $1800 and so with the federal stimulus program they are net positive from Uncle Sam (kinda, assuming you only pay income tax and nothing else).
- pydry 5y agoTitle is misleading. Article is about federal income taxes not all income taxes.
- TheCoelacanth 5y agoAnd even saying "federal income taxes" is misleading because FICA are federal income taxes paid by everyone who earns wages.
- rufus_foreman 5y agoFICA is a payroll tax, not an income tax. You don't pay FICA on dividends, capital gains, interest, rental income, pensions, Social Security, etc. But they are subject to the federal income tax.
- TheCoelacanth 5y agoYou don't pay income tax on capital gains either. You pay capital gains tax.
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- rufus_foreman 5y agoCapital gains are income. What bucket do you account for them in?
- dehrmann 5y agoSince it said "Americans," I assumed it was at the federal level.
- bwb 5y agoDoes this count payroll taxes? Very confused how this is possible if they accurately count payroll taxes.
- whoomp12342 5y agohow is that possible with tax being pulled out of paychecks?
- wjossey 5y agoBecause you get a refund for taxes paid which you didn’t owe. You pay an estimate over the course of the year based on how much your employer thinks you’ll make, then they (the IRS) refund you the difference if you make too little, or have sufficient deductions to further lower your tax bill.
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- Jtsummers 5y agoAt least two ways: 1. Refunds if you were overtaxed during the year. For instance, someone making $100k/year but was laid off in March or April when COVID closures started hitting may have had a large amount withheld that was refunded if they remained unemployed the rest of the year. 2. Your income is sufficiently low. If your income is below a certain threshold (or you just claim a lot of credits on your W-4) then nothing will be withheld. Common with minimum wage part-time jobs.
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- chrisseaton 5y ago> how is that possible Doesn't the US have a 0% tax bracket? And even if it didn't, whatever% of $0 income is $0.
- daveslash 5y agoPart of the article's point was that so fewer people even got paychecks in 2020. That, and pandemic relief in the form of tax credits, which reduced people's tax liability. But also keep in mind: not everyone who has income gets it from a paycheck; plenty of self-employed or small business people don't get paychecks; when they're paid, it's up to them to put money aside all year to pay taxes at tax time.
- at_a_remove 5y agoMeanwhile, I still haven't gotten my tax refund for 2020. Mind you, I am in no hurry, it isn't like I am desperate for that amount. Aside from a very slight anxiety that my paperwork (and it was paper) got lost, getting last year's refund in the month of December (yes, the last one of the year) was an interesting if small indicator of just how poorly the federal government was doing at the time.
- nradov 5y agohttps://www.irs.gov/refunds https://www.irs.gov/refunds Check your refund status. If you haven't received it yet then you might be a victim of tax fraud. Or the IRS is reviewing your return for possible audit.
- at_a_remove 5y agoI check that weekly, as I did last year. And I would be one of the last people reviewed, my taxes are dead simple and I use TurboTax anyway because I am a coward. My guess is that it will be late again.
- OldHand2018 5y agoAre you expecting a paper check? Have you checked your tax transcript? When you go to that page on your IRS account, you get 4 boxes to choose from. 2020 should be in all boxes by now. I think it is the top left one, but once that is populated your refund has been put in the queue. My data showed up there about a week and a half ago, and I got the direct deposit yesterday (with interest). A coworker had his data show up at the same time but he is still waiting on the paper check.
- at_a_remove 5y agoAh, I don't have an account. It'll show when it shows ... I am pretty relaxed about it. It's just interesting to me to see the delay.
- wjossey 5y agoImportant to note to non Americans that this does not mean that 61% paid no taxes, it’s that they didn’t pay a specific type of tax (income at the federal level). Individuals likely still paid Social Security taxes, Medicare taxes, and potentially state and local taxes (which vary wildly). Most states also have sales taxes as well, and some local municipalities have surcharges as well. And, lastly, we do have property taxes, which can be quite significant in large parts of the country. Even if you’re a renter, these costs are often indirectly passed on to you. So, while federal income tax may have been less of a burden last year, there was likely still lots of taxes that each of these individuals paid. Disclaimer: This post isn’t meant to be a statement of support or criticism of taxes. Just trying to highlight the many ways we pay taxes beyond federal income tax.
- bluedevil2k 5y agoTo build off your details, many Americans also received a net payment back for federal taxes through the Earned Income Tax Credit (effectively a negative income tax).
- 300bps 5y agoYou’re correct but don’t take into consideration things like child tax credits. I have family members that pay a total of $400 in tax yet receive a $9,000 or more “refund” due to various credits. So yes, there is a sizable portion of the population that literally pays a negative tax rate even when factoring in all of the taxes you mentioned.
- michaelmrose 5y agoThis is probably because the top 10% earns almost half of income in America, the next 40% of America shares about 38% and the bottom HALF of Americans share less than 12% between them. As far as wealth this bottom half also holds 2% of the net worth. It should be unsurprising that people who have nothing aren't paying much.
- refurb 5y agoSure, but you’re ignoring just how progressive the US federal tax system is. And in fact, many of the state income taxes are too. A few states have flat taxes (but with healthy exemption), the other have brackets that steeply increase.
- BitwiseFool 5y agoPeople don't realize that when the Income Tax was first proposed it was predicated on the idea that most Americans would not end up paying it. As you can imagine, it was only for 'the rich' to pay. The first tax bracket was a measly 1% on income over $3,000 at the time, which WolframAlpha says is about $80,500 today. https://www.wolframalpha.com/input/?i=%243%2C001+in+1913+USD https://www.wolframalpha.com/input/?i=%243%2C001+in+1913+USD https://en.wikipedia.org/wiki/Income_tax_in_the_United_States#Federal_income_tax_rates https://en.wikipedia.org/wiki/Income_tax_in_the_United_State... EDIT: I needed to correct myself, according to the IRS "Congress adopted a 1 percent tax on net personal income of more than $3,000 with a surtax of 6 percent on incomes of more than $500,000." Thank you to alecst for correcting me.
- bwb 5y agoSure, and back then people didn't fathom flying, tanks, or space exploration either. Good thing we learned better :)
- simonsarris 5y agoIf you break down what the US gov spends money on it is absolutely not those things. The US is mostly in the business of insurance (welfare, healthcare) and "education". Defense and infrastructure come some time after those. Of the things they could fathom, they might have even been better at them. Certainly better per dollar spent.
- bwb 5y agoYes and those things are fantastic, as they provide the platform we all run on.
- zionic 5y agoHardly, those things are parasitic load that prevents the platform from growing and prospering. They also breed dependence and servitude to the centralized authority, many of which are even designed such that working and earning income puts you in a worse spot than not. The people in charge aren’t stupid, it works this way by design.
- throwawayboise 5y agoI got downvoted last time I said this, but with fiat money there is no reason for anyone to pay income taxes. Obviously there is no correlation between income tax revenue and government spending. They just create the money they need, the never-to-be-paid-off deficit grows, the value of the dollar shrinks, and we move on. Taxes serve as a means of coercing the behavior of the citizens, in the sense that certain things are rewarded with tax deductions or credits, and other things are punitively taxed. That is the reason they still exist. We should just do away with taxes. People's work and business activity, conducted in terms of US dollars, creates value. The government takes some of that value by simply creating more dollars. Why do we need a huge, complicated taxing bureaucracy in the middle of it?
- 988747 5y agoThe point of income tax isn't revenue - that comes from printing money, or from corporate taxes. Income tax is basically a surveillance tool - it forces you to declare all your income sources, and a large part of spending (if you want to claim some tax breaks).
- colinmhayes 5y agoThis is a shit take. Please refrain from commenting on things you are clueless about. I don't have time to explain macroeconomics to you, although I'd encourage you to study yourself. Suffice to say the government can not, and does not pay for itself by endlessly expanding the money supply. That is one tool it has, but if overused causes severe inflationary problems. One of the US's biggest strengths is the reliability of its currency to inflate at 2-3% a year.
- pg5 5y agoDo you mean removing income tax or also sales tax, property tax, etc?
- twiddling 5y agoHow do you fund the framework that secures your rights?
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- duxup 5y agoFederal income taxes aren't the only tax tho. Even with an accurate tittle, I think the whole story is based on a rando stat without much context... Taxes is such a big topic and here we are where everyone is going to talk about that topic, when the story really only informs (a little...) about a small piece of it. Meta: I feel like HN has rapidly turned a corner where the title is driving clicks and up-votes and the content of the article is not. To some extent that is always the problem but the scale seems to be moving rapidly :(
- matthewbauer 5y agoI wonder what % of people don't file taxes. And what % of those, are owed a refund? That would skew these stats a lot if people aren't claiming what they're owed.
- InTheArena 5y agoThis is a big reason we have two Americas. It's well past time to ditch this, and just move to a consumption based tax everywhere. The current system is just a tool for the parties to target money at their own constinuencies, and is almost impossible to manage or stay compliant with. The poor don't pay it a all while the hyper rich can afford the tricks and lawyers to not pay it. The only ones who pay income tax are the middle class and the lower upper class (IE, not the 1%).
- nazgulnarsil 5y agoReminder that the bottom 50% of the population by income pays 3% of federal tax receipts. Collecting tax from them is theater designed to make taxation seem more fair, but after frictional costs of collection + deadweight losses are accounted for this is likely net negative.
- kthejoker2 5y agoAt the end of day, what's not super helpful is a bunch of "Actually ..." comments in a disjointed thread on a clickbait article from a biased (pro-business class) source. It would be a lot more helpful to just have some Snopes.com-style primer on "how Americans pay taxes." Here are some examples - though I have not personally vetted any of these for bias, they seem to be based on a shared set of facts and designations, and are, if not neutral, then also not clearly pushing a particular agenda. * https://www.pgpf.org/budget-basics/who-pays-taxes https://www.pgpf.org/budget-basics/who-pays-taxes * https://en.wikipedia.org/wiki/Progressivity_in_United_States_income_tax https://en.wikipedia.org/wiki/Progressivity_in_United_States... * https://itep.org/who-pays-taxes-in-america-in-2019/ https://itep.org/who-pays-taxes-in-america-in-2019/ * https://www.cbpp.org/research/misconceptions-and-realities-about-who-pays-taxes https://www.cbpp.org/research/misconceptions-and-realities-a... (This one is the closest to a Snopes-style "debunking" of the "61% paid no income taxes" headline)
- 86J8oyZv 5y agoAt some point we'll realize that all income tax is regressive, and that property/wealth taxes (including on owned stocks, crypto, etc.) are the only thing that makes sense. Cash, frankly, doesn't matter at this stage of capitalism. Equity and assets do.
- GaryTang 5y agoProperty and wealth taxes are regressive as well. Negative externalities should be our only source of tax.