Poll: 47% of Households Will Not Owe Taxes in 2009 – Is That Fair?
By Jeremy on Oct 05, 2009 with Comments 33
I don’t think you can find a single person out there who enjoys paying taxes, but I encountered an interesting article on CNN this morning that said nearly half of all U.S. households will not owe any federal income tax for 2009. At first I thought I was reading it wrong or that they were using a provocative headline to grab attention, but after reading the story it seems as if it’s true.
While it doesn’t come as a surprise that lower income households make up the bulk of the households that don’t pay taxes, it was a bit shocking to see that over 25% of those who don’t pay taxes earned more than $50,000 a year, and even 7% came from the $100,000 a year or more group. That means there is a lot of money being left on the table in terms of tax revenue. To be more specific, that’s over 70 million households.
Obviously, we have a progressive tax system that ensures those with lower incomes pay fewer taxes and may even get some tax credits back, but it also looks like there is a lot of money out there that isn’t getting taxed even by some with higher incomes. Now, I’m not suggesting we need to tax people more to make up the lost revenue, because frankly, I hate paying taxes and feel I pay way more than I should. But, as we continue to operate at such a deficit and people want to spend even more money and expand government programs I have to wonder where this money is going to come from.
Is it fair that roughly half of all households earning an income are getting away without paying Uncle Sam? I’m just curious to see where you guys stand on this issue. Has the tax system become too progressive and it’s leaving a wider tax gap between the rich and the poor? Or are things not progressive enough and we should tax those who earn more money at an even higher rate to recover tax revenue?
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Paying taxes is not a bad thing. Your taxes pay for everything from education to law enforcement to defense. Taxes are what enables a civilized modern society. Frankly, you don’t have to agree with every program your taxes get used for – that’s why we have a system of representative democracy. Everyone gets a say, but no one is 100% happy with the result.
If you want to be mad at something, be mad at the fact that income from different sources is treated differently. A dollar is a dollar is a dollar, and it should be taxed the same whether it is earned from work, from capital gains or from dividends. That is the inherent unfairness built into the system.
I’m 100% fine with paying taxes as long as the money is put to good use. What I don’t like is paying a higher percentage than those who make more than me and can afford a good accountant. Tax reform needs to cut down on deductions and clean up this mess.
What I wonder is… do the people who do these “studies” have any idea how taxation works? Do any of you who are leaving comments?
How exactly did they define “Income”? They are obviously not basing this off of “taxable income” – otherwise these folks would have paid taxes!
If “income” is defined as what is on your W-2, 1099′s, 1099-B – then that doesn’t take into account ANYTHING. What about business income/losses, capital gains/losses, asset basis, normal deductions and exemptions?
Just taking someone’s W-2 number and getting upset when they don’t pay taxes is ridiculous. That’s like looking at a company’s gross revenue and completely ignoring that they may have different cost structures (and maybe even have losses!). There is a reason you aren’t taxed on your “top-line” of income – because it makes no sense.
But yet we still seem to get these populists who have absolutely no idea how taxation works calling for a “flat-tax” as if that’s going to make it simpler.
News Flash: Taxation is complicated not because of the rate at which income is taxed, but because finding out what income is ACTUALLY taxable. If I make $100 but it costs me $90 to make that revenue, should I pay as much tax as someone who made $100 with only $10 of costs?
Please don’t post misleading studies performed by morons.
Also… It’s easy for you to drive your car to your cushy job, sip your starbucks, and then complain how half the country doesn’t pay INCOME taxes, how lazy they must be and they aren’t nearly as successful or as smart as you.
The poor still pay a very high percentage of their income in sales and payroll taxes, and still have barely enough to cover the necessities – if they have enough at all. If anything, this misleading study shows us how imbalanced our incomes have become. The rich pay overall, much less in payroll taxes, sales taxes – and capital gains and dividends (a majority of their income) is taxed at lower % – meaning that very often, the “effective tax rate” for the very rich is much lower than a middle or working class individual.
Please note: I understand that capital gains are taxed at a lower percentage in order to avoid excessive double taxation of corporate income – By reducing the corporate income tax and increasing the dividend or capital gain tax this could break even while still not supporting the very rich quite as much.
Also, I am not in support of higher taxes, but saying everyone needs to pay their “fair share” by levying income tax against the very poor (who already pay a high enough % in taxes) is missing the overall flaws in our tax system.
In my opinion, everyone paying their “fair share” would be for everyone to pay the same dollar amount. Call it regressive if you will, but equality demands nothing less.
That would utterly destroy the economy. No modern industrialized country has ever existed that I’m aware of. I don’t think any modern industrialized country has even prospered with a flat tax *rate* for that matter.