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I don't understand the often-repeated conservative talking point that "almost half of all filers pay no income taxes at all". There are only two kinds of people

I don't understand the often-repeated conservative talking point that "almost half of all filers pay no income taxes at all". There are only two kinds of people who pay no income taxes at all: the desperately poor and the super-rich (who are taxed on investments at the 15% long-term capital gains rate). Is the conservative proposal really that we should tax the desperately poor? Because that seems not only a terrible public policy choice, but an extremely inefficient way to close our budget gap.

dantheman 15y ago
I did a little googling for you, from 2009: "About 47 percent will pay no federal income taxes at all for 2009. Either their incomes were too low, or they qualified for enough credits, deductions and exemptions to eliminate their liability. That's according to projections by the Tax Policy Center, a Washington research organization." ... "In recent years, credits for low- and middle-income families have grown so much that a family of four making as much as $50,000 will owe no federal income tax for 2009, as long as there are two children younger than 17, according to a separate analysis by the consulting firm Deloitte Tax." http://finance.yahoo.com/news/Nearly-half-of-US-households-apf-1105567323.html?x=0 http://finance.yahoo.com/news/Nearly-half-of-US-households-a...
- wycats 15y ago
  Low- and middle-income families pay most of their taxes in the form of payroll taxes, which are a mandatory 15% tax (shared by the employer, who also pays their salary) on all income. Consumption taxes also apply to everyone, and for those who spend most of their income each year, this amounts to at a 5-10% additional tax. Virtually nobody, with the exception of the very poor who qualify for the EITC, are safe from these tax. The "50% pay no tax" is a right-wing talking point that is intentionally dishonest.
  - NeilCJames 15y ago
    What makes Golub's point so misleading is that he counts consumption taxes, payroll taxes, state taxes, and even future estate taxes when he pays them, but only looks at federal income tax to get the "half the people pay nothing" line.
    - eric-hu 15y ago
      Ah, thank you for clarifying on that. I was wondering how he came up with the figure that 90% of his income would be taxed. I wonder how much the average lower and middle class person would be taxed according to this accounting scheme.
      - mrgubmint 15y ago
        I don't think it's possible to come up with the 80 to 90 percent that he claimed. The top marginal rate for federal tax is 35%. State taxes and sales taxes can be deducted from income for federal tax. Social Security tops out at $106,800.00, and Medicare taxes are 1.45% on all income. As far as the estate tax, he won't pay that - unless he inherited the money. His heirs will pay an estate tax on anything over 5 million dollars that they inherit from him The federal estate tax tops out at 35%, but also excludes some property and deductions. New York state's estate tax is also capped at 35%. Finally, the estate tax is seldom actual double taxation since a large percentage of estates subject to taxation are in the form of stocks or property which are not taxed until they are actually sold.
- njharman 15y ago
  50k for 4 people might not be "desperately" poor. But, it's awfully damn close.

dantheman 15y ago

I did a little googling for you, from 2009: "About 47 percent will pay no federal income taxes at all for 2009. Either their incomes were too low, or they qualified for enough credits, deductions and exemptions to eliminate their liability. That's according to projections by the Tax Policy Center, a Washington research organization." ... "In recent years, credits for low- and middle-income families have grown so much that a family of four making as much as $50,000 will owe no federal income tax for 2009, as long as there are two children younger than 17, according to a separate analysis by the consulting firm Deloitte Tax." http://finance.yahoo.com/news/Nearly-half-of-US-households-apf-1105567323.html?x=0 http://finance.yahoo.com/news/Nearly-half-of-US-households-a...

wycats 15y ago
Low- and middle-income families pay most of their taxes in the form of payroll taxes, which are a mandatory 15% tax (shared by the employer, who also pays their salary) on all income. Consumption taxes also apply to everyone, and for those who spend most of their income each year, this amounts to at a 5-10% additional tax. Virtually nobody, with the exception of the very poor who qualify for the EITC, are safe from these tax. The "50% pay no tax" is a right-wing talking point that is intentionally dishonest.
- NeilCJames 15y ago
  What makes Golub's point so misleading is that he counts consumption taxes, payroll taxes, state taxes, and even future estate taxes when he pays them, but only looks at federal income tax to get the "half the people pay nothing" line.
  - eric-hu 15y ago
    Ah, thank you for clarifying on that. I was wondering how he came up with the figure that 90% of his income would be taxed. I wonder how much the average lower and middle class person would be taxed according to this accounting scheme.
    - mrgubmint 15y ago
      I don't think it's possible to come up with the 80 to 90 percent that he claimed. The top marginal rate for federal tax is 35%. State taxes and sales taxes can be deducted from income for federal tax. Social Security tops out at $106,800.00, and Medicare taxes are 1.45% on all income. As far as the estate tax, he won't pay that - unless he inherited the money. His heirs will pay an estate tax on anything over 5 million dollars that they inherit from him The federal estate tax tops out at 35%, but also excludes some property and deductions. New York state's estate tax is also capped at 35%. Finally, the estate tax is seldom actual double taxation since a large percentage of estates subject to taxation are in the form of stocks or property which are not taxed until they are actually sold.
njharman 15y ago
50k for 4 people might not be "desperately" poor. But, it's awfully damn close.