Wednesday, April 07, 2010

47% of American Households Pay NO Income Tax

A study done by the Tax Policy Center reveals that ~47% of American households will pay NO income tax for 2009. Now, the Statistics of Income Division (SOI) in the IRS will confirm that estimate (or not) when it publishes the tax data for 2009 next year. However, when you read how the Center came up with its estimate it is not hard to imagine that their conclusions could be correct.

What this means is that the rest of us are paying the freight for the country. The income tax accounts for ~50% of the country's revenues. Looking at the report generated by SOI for 2007 (select the very first report group on the list and click the year 2007), it appears to me that of the income taxes paid that year:

~38% came from people with incomes in the $100K - $500K range,
~37% from people above $500K,
~24% from people below $100K.

The Short Form - if you had taxable income in the land of 6 figures and more, you were in the category that paid 75% of the income tax that year. And people think the rich don't pay taxes.

If the Center's assertions turn out to be correct, the ratios should be going up in the categories over $50K and down in the rest. The mantra is to cut taxes in the main, but raise them on the well off to pay for the rest. It would appear that was happening before Obama became President.

People grouse about taxes, but they need to start paying closer attention to what is being deducted from their pay, and for what purpose, before they start complaining about the reach of Uncle's fingers into their collective checkbooks.

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