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47% will pay no federal income tax

Cremaster77

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Roughly 47 percent of households, or 71 million, will not owe any federal income tax for 2009

Okay. I'm all for a progressive tax system. But how can it possibly be good for the country when so many voters don't have to pony up any skin in the game? The problem we have with our government is that people vote for politicians who promise to give them things for free. And those that have the guts to try to take stuff away from people immediately get voted out of office. I understand that some people in this country simply can't afford any taxes. But half of the population? No wonder we get the government we get. We get what we pay for, which for almost half of the population is nothing.
 
Roughly 47 percent of households, or 71 million, will not owe any federal income tax for 2009

Okay. I'm all for a progressive tax system. But how can it possibly be good for the country when so many voters don't have to pony up any skin in the game? The problem we have with our government is that people vote for politicians who promise to give them things for free. And those that have the guts to try to take stuff away from people immediately get voted out of office. I understand that some people in this country simply can't afford any taxes. But half of the population? No wonder we get the government we get. We get what we pay for, which for almost half of the population is nothing.

Has nothing to do with a progressive tax system. It has everything to do with a broken tax system.

For example, in my home country, everyone pays taxes regardless of how you get your income. So that means the unemployed pay a certain amount in tax of their unemployment insurance and so on. It might not be much, but the principle of everyone contributing to society regardless of income is a good one.
 
Has nothing to do with a progressive tax system. It has everything to do with a broken tax system.

For example, in my home country, everyone pays taxes regardless of how you get your income. So that means the unemployed pay a certain amount in tax of their unemployment insurance and so on. It might not be much, but the principle of everyone contributing to society regardless of income is a good one.

Every legal worker in the US pays unemployment insurance. It's a separate deal.

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You do realize that income tax alone does not represent all federal taxes no?

http://www.cbo.gov/publications/collections/tax/2009/tax_liability_shares.xls

There's 3 other things classified as federal taxes. Social Security, Corporate, and Excise taxes. I personally don't consider SS tax as a tax per say, because it's basically a retirement fund that all workers who contribute to it are eventually eligible to receive. Excise taxes are taxes on certain goods, such as cigarettes and liquor.

Income tax and Corporate tax are the only two that are based on the amount of money you make, and of course very few if any of the bottom 50% of income earners pay Corporate taxes.

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Every legal worker in the US pays unemployment insurance. It's a separate deal.

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not what I meant.

Every PERSON who has any form of income, may it be pension, unemployment payments, student payments or normal wages, pays a percentage in tax. This means if you get unemployment payment from the state, then you pay taxes of that payment, just as if you would if you got a real wage from a company. The only difference is often the % paid and other legal technicalities.
 
You do realize that income tax alone does not represent all federal taxes no?

http://www.cbo.gov/publications/collections/tax/2009/tax_liability_shares.xls

But if we pretend that SS/Medicare are their own things which are separate from general revenues (humor me), then we shouldn't really be considering those payments in looking at tax burden. Even if you don't want to separate those out, another way of looking at what is being linked in the OP is that 47% of the country is not paying any money toward anything other than Medicare/SS. The 53% that is paying taxes is responsible for all other spending as well as their own share of Medicare/SS.

not what I meant.

Every PERSON who has any form of income, may it be pension, unemployment payments, student payments or normal wages, pays a percentage in tax. This means if you get unemployment payment from the state, then you pay taxes of that payment, just as if you would if you got a real wage from a company. The only difference is often the % paid and other legal technicalities.

This seems sort of counterproductive to me. Someone in the US earning $10k a year and supporting a family of four is eligible for plenty of programs that will result in him receiving several thousands of dollars of federal and state money in order to help his family. I assume it's the same in your country. In terms of efficiency, why would we want to tax his income at all, if we're just going to be giving him the money back in another way? Adding the tax will only create an additional incentive for him to work off the books, which is what already happens here. It's amazing how often people (especially poor people) work off the books so as to avoid paying SS/Medicare taxes. I think it would be best if we eliminated all up-front taxes for those who made less than $20k or so.
 
There's 3 other things classified as federal taxes. Social Security, Corporate, and Excise taxes. I personally don't consider SS tax as a tax per say, because it's basically a retirement fund that all workers who contribute to it are eventually eligible to receive. Excise taxes are taxes on certain goods, such as cigarettes and liquor.

Income tax and Corporate tax are the only two that are based on the amount of money you make, and of course very few if any of the bottom 50% of income earners pay Corporate taxes.

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SS/medicaid taxes go into the general fund and are spent. There is no lock-box. The percentage-return on SS "investment" is pathetic, and it will likely not exist (or be much curtailed) by the time I am 65.

I'd opt out if I could. Since I can't, it is a TAX.

As I understand it, everything I buy has "value added" or corporate taxes that contribute to the final price, anywhere from 10% to 50% of what I pay is ultimately because of taxes on business and regulatory compliance costs.

Not to mention the ways in which gov't taxation affects the economy and the business I work for.

Almost everyone pays taxes, some are just more obvious and direct than others.
 
This seems sort of counterproductive to me.

It is hardly counter productive.

For one everyone has a stake in society by paying taxes, whatever the size they pay. If you have large portions of the populace avoiding paying any income taxes then you will create a two tier society causing all sorts of perception problems. Those not paying taxes will think it is better not to earn more since that would mean they had to pay taxes and those earning enough to pay taxes will be pissed at the latter because they are avoiding taxes. No one likes tax dodgers.

Someone in the US earning $10k a year and supporting a family of four is eligible for plenty of programs that will result in him receiving several thousands of dollars of federal and state money in order to help his family. I assume it's the same in your country.

yes and no. Our systems are so different on so many fronts. For example, if a person can get state aid because of poverty, that aid will be taxed just as if it was a wage. It is the principle. The tax itself is the minimum of course and it is not much, but in principle there are very few incomes that are taxed regardless of the source.

In terms of efficiency, why would we want to tax his income at all, if we're just going to be giving him the money back in another way?

I agree it is not very efficient, however in this case efficiency must give away for fairness. Plus everything is done electronically these days so the administrative stuff is rather minimum. In Denmark companies and banks report what they pay in wages and via the tax paper that every employee has to provide the company, the company on behalf of the tax man, takes the require tax and pays it to the tax man. It is all done automatically. On top of that, the tax man pretty much does the tax return for you and all you have to do is either amend it if something is wrong or add if there is something missing. For example as an election monitor you get 600 kr per day, which has to be reported and is not automatic.

The whole idea, is that everyone, from the paper boy to the CEO pays income taxes in some way and hence contributes to society.

Adding the tax will only create an additional incentive for him to work off the books, which is what already happens here. It's amazing how often people (especially poor people) work off the books so as to avoid paying SS/Medicare taxes. I think it would be best if we eliminated all up-front taxes for those who made less than $20k or so.

You could also argue having a tax break for the first 20k will mean people wont work for more than the 20k.. not exactly good either, since they regardless of income use state services. The way the Danes and most Europeans do it, is that everyone contributes regardless of what part of society.. heck even pensioners pay income taxes in Denmark, granted at the minimum level, but they pay it.
 
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What's even worse is that most corporations don't pay corporate taxes:

"93.9 percent of U.S.-controlled companies pay less than 5 percent of its income in taxes; 63 percent pay no tax at all."

Do corporations pay too little in taxes? - Atlanta Business Chronicle:

We discussed this article back when it came out - it horribly misunderstands how most business are operated/organized. Most "corporations" are one man shops that earn little or no profit each year or distribute their profits as income to the owners, who then pay income tax on it. Furthermore, it calculates the numbers on gross income rather than profit, which is absolutely idiotic.

It is hardly counter productive.

For one everyone has a stake in society by paying taxes, whatever the size they pay. If you have large portions of the populace avoiding paying any income taxes then you will create a two tier society causing all sorts of perception problems. Those not paying taxes will think it is better not to earn more since that would mean they had to pay taxes and those earning enough to pay taxes will be pissed at the latter because they are avoiding taxes. No one likes tax dodgers.

My point is that this already happens all the time. The more you force lower earners to pay taxes up front, the more likely they will be to work off the books.

I agree it is not very efficient, however in this case efficiency must give away for fairness.

How is it less fair if the end result is the same? If we decide that families of 4 earning $10k actually need $20k to survive, how is it more or less fair to charge them $2k in taxes before giving them $12k than to charge them $0 in taxes and then give them $10k?

Plus everything is done electronically these days so the administrative stuff is rather minimum. In Denmark companies and banks report what they pay in wages and via the tax paper that every employee has to provide the company, the company on behalf of the tax man, takes the require tax and pays it to the tax man. It is all done automatically.

This is exactly how it works here. The problem is that this doesn't cover the millions of people who work off the books.

The whole idea, is that everyone, from the paper boy to the CEO pays income taxes in some way and hence contributes to society.

How is "everyone contributing to society" more when it's the $8/12 example above as opposed to the $10/10 example? The end result is exactly the same.
 
We discussed this article back when it came out - it horribly misunderstands how most business are operated/organized. Most "corporations" are one man shops that earn little or no profit each year or distribute their profits as income to the owners, who then pay income tax on it. Furthermore, it calculates the numbers on gross income rather than profit, which is absolutely idiotic.

Correct. My company is an S corporation, and I am taxed directly, as personal income, on my half of the yearly profits. This is on top of the income tax on the salary that I pay myself.
 
Roughly 47 percent of households, or 71 million, will not owe any federal income tax for 2009

Okay. I'm all for a progressive tax system. But how can it possibly be good for the country when so many voters don't have to pony up any skin in the game? The problem we have with our government is that people vote for politicians who promise to give them things for free. And those that have the guts to try to take stuff away from people immediately get voted out of office. I understand that some people in this country simply can't afford any taxes. But half of the population? No wonder we get the government we get. We get what we pay for, which for almost half of the population is nothing.

The scary truth, which no democrat will ever admit, is that federal income tax is only a small (15% or so) part of the national budget. Most funding comes from taxes on sales, liquors, tobacco, and various tariffs.

Income tax was created to fund World War I and was supposed to be dropped after the war. However, some greedy scumbags decided to make it permanent.

Federal income tax is not really needed to run the country. It's just a tool of partisan politics.
 
The scary truth, which no democrat will ever admit, is that federal income tax is only a small (15% or so) part of the national budget. Most funding comes from taxes on sales, liquors, tobacco, and various tariffs.

Yes regressive taxes where the poor pay in more are the norm.
 
Yes regressive taxes where the poor pay in more are the norm.

That's not an inherent problem with those taxes. That's entirely behavioral.
 
We discussed this article back when it came out - it horribly misunderstands how most business are operated/organized. Most "corporations" are one man shops that earn little or no profit each year or distribute their profits as income to the owners, who then pay income tax on it. Furthermore, it calculates the numbers on gross income rather than profit, which is absolutely idiotic.



My point is that this already happens all the time. The more you force lower earners to pay taxes up front, the more likely they will be to work off the books.



How is it less fair if the end result is the same? If we decide that families of 4 earning $10k actually need $20k to survive, how is it more or less fair to charge them $2k in taxes before giving them $12k than to charge them $0 in taxes and then give them $10k?



This is exactly how it works here. The problem is that this doesn't cover the millions of people who work off the books.



How is "everyone contributing to society" more when it's the $8/12 example above as opposed to the $10/10 example? The end result is exactly the same.


That is "don't tax my business" republican rhetoric. Businesses earn plenty of profit.
 
My point is that this already happens all the time. The more you force lower earners to pay taxes up front, the more likely they will be to work off the books.

I disagree.. depends on the people. In Denmark everyone has a minimum deductible aka, the first X thousand is tax free and you can either use that limit monthly or pay no taxes until the limit is reached. However that limit is lower than the minimum wage for example. For example in Denmark when I was a part time post man during my studies, I had a monthly deductible of about 3200 kr. (currency does not matter in this example, the principle). If I only worked the minimum hours as required by my contract then I would pay no taxes (other than the mandatory workers tax.. its like 30kr a month). If I got more hours then I would breach the limit of my deductible and anything over the deductible I would pay 37% in taxes. If I went totally nuts and worked near full time, then at some point my wages earned over the next step would be taxed by 47% instead of 37%.. and so on. But in all this I knew I was contributing to society because I was in the tax system and I did pay minimal taxes. And that is the point.

How is it less fair if the end result is the same? If we decide that families of 4 earning $10k actually need $20k to survive, how is it more or less fair to charge them $2k in taxes before giving them $12k than to charge them $0 in taxes and then give them $10k?

As I said, people have to feel they are contributing to society via taxes and that everyone around them is in some way contributing. For example your family. If you give them 10k to survive on top of the 10k they earn, and they pay no taxes what so ever, then they would never feel what it is like to pay taxes like the rest of us. They would be leeches on society with no concept on the burden the rest of us have.

Where as if you gave them 12k and charged them 2k in taxes, they would say.. damn I had to pay 2 k in freaking taxes on a freaking handout.. and they would know how we feel when our taxes go to that handout.

This is exactly how it works here. The problem is that this doesn't cover the millions of people who work off the books.

That is lack of accountability. If the companies allow such "off the books" and do not get busted and fined for it, then they will continue to do so. Its the same principle as your illegal immigration problem. In Denmark we also have the problem like everyone else, however it is at the real low level.. pizza bars and stuff, since the consequences of getting caught can be very high. People have actually gone to jail for hiring off the books. The main problem of the "dark economy" is friends giving friends help.. a plummer doing work for a carpenter and visa versa. That is much harder to deal with.

How is "everyone contributing to society" more when it's the $8/12 example above as opposed to the $10/10 example? The end result is exactly the same.

Not it is not. You are thinking in absolute money terms. I am talking about mentality.

Another example. The paper boy. He will know that the first X thousand is tax free like anyone else, but he still has to hand in his tax papers to the company or he WILL be automatically taxed 60% of his income for not doing so. Therefore it is up to the person to prove that he has a deductible via the tax papers everyone has (basically telling the company which way he wants to use his deductible). If the company does not receive those papers then they are required by law to take 60% in taxes. The point is that every single person will feel that they are participating every day, every 14 days or every month in the tax system regardless if they earn under the deductible or over it. That feeling is priceless if you ask me, since everyone feels they have a vested interest in society.
 
That is "don't tax my business" republican rhetoric. Businesses earn plenty of profit.

Which businesses, and how much?
 
The scary truth, which no democrat will ever admit, is that federal income tax is only a small (15% or so) part of the national budget. Most funding comes from taxes on sales, liquors, tobacco, and various tariffs.

This is absolutely false.

USreceipts.png
 
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As I said, people have to feel they are contributing to society via taxes and that everyone around them is in some way contributing. For example your family. If you give them 10k to survive on top of the 10k they earn, and they pay no taxes what so ever, then they would never feel what it is like to pay taxes like the rest of us. They would be leeches on society with no concept on the burden the rest of us have.

Where as if you gave them 12k and charged them 2k in taxes, they would say.. damn I had to pay 2 k in freaking taxes on a freaking handout.. and they would know how we feel when our taxes go to that handout.

I think you're really overestimating the impact this has on people. I don't think the added administrative costs and significantly increased risk of people working off the books or not working at all. Think about it - we want to incentivize poor people to go out there and get jobs. If they're working for minimum wage and having to pay a substantial portion of their income in taxes, they're a lot more likely to quit that job or avoid taking it in the first place than they would otherwise be.

That is lack of accountability. If the companies allow such "off the books" and do not get busted and fined for it, then they will continue to do so. Its the same principle as your illegal immigration problem. In Denmark we also have the problem like everyone else, however it is at the real low level.. pizza bars and stuff, since the consequences of getting caught can be very high. People have actually gone to jail for hiring off the books. The main problem of the "dark economy" is friends giving friends help.. a plummer doing work for a carpenter and visa versa. That is much harder to deal with.

And that second type of thing is what I'm talking about. It's usually not huge corporations hiring people off the books, but smaller shops or people working on their own. And it's easy for a country like denmark to keep everyone on the books, because they don't have 12-15 million illegal immigrants in their country. (Not to mention that it's a bit disingenuous to imply that the reason illegal immigration isn't a problem in Denmark is because of their rigorous enforcement).
 
The scary truth, which no democrat will ever admit, is that federal income tax is only a small (15% or so) part of the national budget. Most funding comes from taxes on sales, liquors, tobacco, and various tariffs.

Income tax was created to fund World War I and was supposed to be dropped after the war. However, some greedy scumbags decided to make it permanent.

Federal income tax is not really needed to run the country. It's just a tool of partisan politics.
Try again. In 2007, personal income tax made up 45% of federal receipts, employment taxes 34% and corporate income tax 14%. Excise taxes only made up 3% of federal receipts.

It's a flat out lie to say that income tax is only 15% of so of the budget. Between corporate and personal income taxes, they make up 59% of all federal receipts.

Edited to add: Oops. Didn't see the post by RightinNYC until after I posted.
 
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You do realize that income tax alone does not represent all federal taxes no?

http://www.cbo.gov/publications/collections/tax/2009/tax_liability_shares.xls
Yes. But they make up a big percentage of them. And in that same study by the TPC, almost a quarter of population has ZERO tax liability even accounting for payroll taxes like SS and Medicare. The only federal tax liability these people have are excise taxes like gas and telephone which are so incredibly obscured, there is no sense of having skin in the game even if you pay them.
 
But if we pretend that SS/Medicare are their own things which are separate from general revenues (humor me), then we shouldn't really be considering those payments in looking at tax burden.

I suppose, but ignoring close to 50% of the federal budget doesn't suggest a meaningful discussion.

Even if you don't want to separate those out, another way of looking at what is being linked in the OP is that 47% of the country is not paying any money toward anything other than Medicare/SS. The 53% that is paying taxes is responsible for all other spending as well as their own share of Medicare/SS.

I guess, but to ignore close to 50% of the federal budget is rather...ludicrous. Conversely, we could argue that the super rich are getting a free ride on FICA when their incomes are not subject to those withholding due to tax structuring.
 
Yes. But they make up a big percentage of them.

As does the entitlement taxes. Interestingly enough, the CBO data suggests that the level of wealth is somewhat correlated to the level of taxes (with a few exceptions, namely the group between the top 15% and top 5%).

And in that same study by the TPC, almost a quarter of population has ZERO tax liability even accounting for payroll taxes like SS and Medicare.

That is a misunderstanding of what it actually said:

"When considerising federal income taxes in combination with payroll taxes, the percent of households with a net liability of zero or less is estimated to be 24% th year, according to the Tax Policy Center's estimates."

They have a tax liability that is initially positive. They still have to file. Except that they qualify for enough refundable taxes to have income from the government.
 
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