December 14, 2009
When Taxes Aren't an Issue
Mark Perry observes (with charts) a progressive trend in American taxation:
The Tax Foundation reported last week that more than 143 million individual income tax returns were filed in 2007, and 46.6 million of those returns had a zero or negative tax liability, setting a new record for the number of "non-payers." This group represented almost one out of every three tax returns filed in 2007 (32.6 percent, see chart above), and reflects tax filers whose exemptions, deductions, and credits wiped out any federal income taxes that would have been due. According to the Tax Foundation, every dollar withheld from the paychecks of the "non-payers" during the year was refunded, and in about half of the cases, substantial additional money was refunded to the tax filer. There were an additional 15 million people in 2007 who did not earn enough income to file a tax return, bringing the total number of Americans who paid no federal income taxes to more than 61 million, or 39 percent of the tax-eligible population (158 million including filers plus non-filers).
As Perry notes in the words of American Enterprise Institute Economist Alan Viard, increases in government spending likely mean less to people who don't think they pay for it. This one item is not a complete explanation, but we appear to be witnessing the realization of a risk that has been foreseen with democracy all along: the majority can simply vote itself money from the minority, disregarding or ignorant of the self-destructive nature of that practice.
It would be interesting to see where those 46.6 million filers fall on the gross income scale. How many under $50,000? How many over $250,000? The left would say that it is all those big bad rich people who find every possible write-off to pay no taxes on their millions. But I'd love to see actual data on it.
Posted by: Patrick at December 14, 2009 10:13 AMSo would I. I think those numbers would open a lot of people's eyes. It's easy to blame the poor and "the unions" for all of our fiscal woes. Bring to transparancy train to every doorstep and see what happens.
Posted by: michael at December 14, 2009 10:30 AMAnyone who has ever looked at data on federal taxes paid by income groups (highest quintile pays almost 70% of all federal income tax; lowest quintile pays less than 1%, etc.) should come to the likely conclusion that ALL of the filers who had no income tax liability were from the low income groups. How could it possibly be otherwise? Sure the wealthy take advantage of every tax break they can, wouldn’t you if you realized you were getting hammered while others pay nothing?
Michael my eyes are wide open and I blame the unions every day of my life for the mess RI is in.
Something like 10% of the population has 90% of the wealth. That may explain the 70%.
Posted by: michael at December 14, 2009 11:32 AM82% of all statistics are made up on the spot.
-Many Attributed
There are three types of lies: lies, damn lies and statistics.
-Mark Twain
Oh, you think you can prove that anything is remotely true with facts.
-Homer Simpson
I'm sick to death of the Marxist mantra that 10% of the population has x% of the wealth. Unless you believe that envy is an honorable attitude, that statistic is totally irrelevant. The only thing that these self-styled "compassionate" people should care about is the absolute level of the quality of life of the lower socio-economic levels. And nowhere else on earth do "poor" people live as well as they do in our relatively (but decreasingly) free economy. As Lincoln said, you cannot raise one man up by dragging another down.
Another fallacy of these Marxist arguments is their premise that there is a fixed amount of "wealth" in the world and the problem is how to distribute it. "Wealth" is nothing more than earnings saved over time. Empirically, wealth is highly dynamic in two ways: first, it does not exist until people go out and earn it first, and second, those who have it but fail to grow it fall behind those who are economically more dynamic. We who have to earn our livings daily know quite poignantly that at the beginning of the day sales are zero and only by making things happen during the day can we earn our suppers and the roofs over our heads for tonight.
As a local example, Linc Chafee does nothing to enhance his family's wealth, but in other families the next generation multiplies the family legacy.
Posted by: BobN at December 14, 2009 5:21 PMPosted by michael
"Something like 10% of the population has 90% of the wealth. That may explain the 70%."
I believe that is true, or a close approximation. Still it must be a pretty big pie if the other 90% have only 10% of the wealth. On average, that 90% is doing pretty well. It would also be interesting to know the definition of "wealth" used. I doubt it is synonomous with "income", although there is probably some correlation.
It is fairly widely known that people with incomes below $50,000 pay minimal income tax, unfortunately it is combined with SS, FICA, Medicaire
and other taxes. Few stop to think what percentage of the whole tax bill is "income tax". If you are paying "self employment tax", you really know where the wallop is.
Posted by michael
"Something like 10% of the population has 90% of the wealth. That may explain the 70%."
I believe that is true, or a close approximation. Still it must be a pretty big pie if the other 90% have only 10% of the wealth. On average, that 90% is doing pretty well. It would also be interesting to know the definition of "wealth" used. I doubt it is synonomous with "income", although there is probably some correlation.
It is fairly widely known that people with incomes below $50,000 pay minimal income tax, unfortunately it is combined with SS, FICA, Medicaire
and other taxes. Few stop to think what percentage of the whole tax bill is "income tax". If you are paying "self employment tax", you really know where the wallop is.