From the Richmond Times Dispatch:
Eric Cantor says that about half don’t pay income tax. Make that half of the tax ‘units.’
“We also have a situation in this country where you’re nearing 50 percent of people who don’t even pay income taxes,” he said.
Is it true that half of all Americans pay no income tax? Let’s take a look.
First, a technical note. When Cantor says people, he means “tax-filing units,” which refers to individuals or couples that either file a tax return or would have if they had earned enough income, according to his staff.
To support his assertion, Cantor’s camp provided a variety of studies and media reports that do indicate about 50 percent of U.S. households owed no federal income tax in 2009 — the most recent year tax data are available.
In 2009, for example, the Tax Policy Center projected 47 percent of people would pay no income tax that year, up from previous estimates of 38 percent — largely due to additional tax credits through the American Recovery and Reinvestment Tax Act of 2009.
Still, that’s a bit dated. Anything newer?
The Joint Committee on Taxation, sent a letter to Congress on the matter only days after Cantor’s “Squawk Box” appearance.
Using 2009 tax data, the committee estimated that slightly more than 50 percent of tax-filing units actually paid no income tax.
“In summary, for tax year 2009, approximately 22 percent of all tax units, including filers and non filers, will have zero income tax liability, approximately 30 percent will receive a refundable tax credit, and approximately 49 percent will have a positive income tax liability,” the letter reads.
“That’s consistent with the numbers we’ve come up with,” said Roberton Williams with the Tax Policy Center.
“The main reason is the fact that we don’t specifically use the tax system to collect taxes; we use it for tax collections and to deliver social policy,” he said. “Because of that we end up giving people money that could be provided to them through spending programs.”
But because the U.S. uses the tax system to distribute money, it reduces the tax liability for 51 percent of tax filing units to, or below, zero.
Williams said that’s largely due to popular tax breaks, or tax expenditures.
“There are lots and lots of them. We estimate they total more than a trillion dollars a year in reduced taxes and in fact the bulk of those go to the top end of the income distribution,” he said.
Even so, because high earners have so much income liability, the breaks still don’t bring them down to zero. But popular lower and middle income breaks like earned income tax credits, child credits and mortgage interest deductions do get a majority of the population off the hook.
I want to be part of that 50%. I have never had a year where I didn’t pay income tax, even those few years I had overpaid. How does one do that? How do I get on that list? How can 50% of the population pay and the other half not pay? Shouldn’t everyone be paying something, even if it is only a dollar a year?
Cantor isn’t making this up.
And this situation is why the mantra of cutting taxes instead of reforming tax rates and codes is idiotic. The GOP panders to everyone about “cutting taxes” and the Dems pander to the same about cutting taxes and taxing only the rich. Of course the definition of rich always depends upon which politician you talk to and to whom that pol is lying..um, speaking….
tax reform, immigration reform, ss reform, medicare reform, healthcare reform –
anybody getting the idea that our Congress has done nothing for the past 30 years, and has just let the country run on autopilot – well, tomorrow has come, and it is today – we will have to drink our castor oil.
I want everyone paying some income tax, even if it is just a dollar a year.
Part of the problem is that middle class wages have stagnated and pay for the wealthy has risen exponentially. The middle middle class seems to be the line of demarcation as far as getting hit for everything.
A big clue should be that people are even taxed on unemployment insurance. Now that is just stupid. Social security is also taxed. Go figure.
Figures lie and liars figure.
The sad part is that GE, Obama’s favorite corporation, is part of that 50%…..in fact they made a profit off the tax code…..
@Moon-howler
Pay for top CEOs up by 11%. Score= CEOs 11, workers maybe NADA.
@Cargosquid
I don’t fault GE. I take every legal tax deduction I can take. Just because the gubmint can legally put a spear to my throat doesn’t mean I should give them anything more than I’m legally obligated to.
Keep working. Tens of millions on welfare and unemployment are counting on you!
@Cargo
How about those oil companies? Let’s see….what do they make off the American tax payer?
I doubt that you or I know what Obama’s favorite corporation is.
The solution is to own oil company stocks and buy up GE. I don’t fault them either, if they dodged the bullet legally.
The only person I know who faults them is my liberal brother.
GE’s CEO is on Obama’s White House Economic Advisory council.
I don’t fault GE. I fault Congress and the idiotic tax code. I just wanted to point out the irony of GE being part of that 50% that paid no taxes.
Yea? Oh well. Beats former connections to Halliburton. Some folks got rich off of defense contractor spending the past 10 years, didn’t they?
the fact is that Congress does not want to fix anything – including the tax code – they spend the money, they set the tax rates, they create the loopholes. That is why it is a farce to talk about the top marginal rates, when the effective rates are much lower.
I agree with Pat and MH on this.. But, I’ll go one up and say when we concentrate too much power in the federales that this is the natural cause and effect cycle we create. We make it so only the federales can ‘permit’ something and then business/lobbyists lobby the government to have access to those permits. Then we wonder why those pesky evil corporations get everything they want.
Break the cycle. Less government means more individual freedom.
Want to know why I’m for much more limited government, especially federal government.
Power corrupts.