Taxes for USA citizens. 50% don't pay Federal income tax. What this means?

[alhoon]

http://blog.heritage.org/2012/02/19/...-income-taxes/

OK, according to this article:

“One of the most worrying trends in the Index is the coinciding growth in the non-taxpaying public,” wrote Heritage authors Bill Beach and Patrick Tyrrell. “The percentage of people who do not pay federal income taxes, and who are not claimed as dependents by someone who does pay them, jumped from 14.8 percent in 1984 to 49.5 percent in 2009.”

How much of the direct and indirect taxes is the Federal income tax? How much do Americans pay to the state? To their city etc?

Also I find that 50% not paying one form of taxes is kinda unfair. I can understand the lower 20%-25% paying one tax less, but 50%?

According to this: http://en.wikipedia.org/wiki/Persona...e_distribution , 48% of people over 25 years old that make money earn 25k$/year.
That's not a lot of money for a family, but more than enough for an individual.

According to this (outdated) article
http://en.wikipedia.org/wiki/Househo..._United_States

Median household income in 2009 was about 50K$
Also " Regionally, in 2010, the Northeast reached a median income of $53,283, the West, $53,142, the South, $45,492, and the Midwest, $48,445.[47] Each figure represents a decline from the previous year."

That means that households that earn about 50K$/year don't pay federal income tax.

What other taxes are paid?

[Astaroth]

Oh god, please not one of these threads again. Is this TWC or Fox news?

They pay plenty of other taxes (such as sales tax and various other state taxes etc). Also, in the US most people pay comparatively little income taxes in terms of % (unlike in Europe you don't have to pay 50%+ income tax),

Also, lots of rich people pay almost no taxes, either. See Buffet or Romney.

[Justice and Mercy]

They pay plenty of other taxes (such as sales tax and various other state taxes etc). Also, in the US most people pay comparatively little income taxes in terms of % (unlike in Europe you don't have to pay 50%+ income tax),

Except the issue is that they're not giving any money to the Federal government.

Also, lots of rich people pay almost no taxes, either. See Buffet or Romney.

, through and through (and Buffet KNOWS this, which makes me wonder what he's playing at.)

Buffet and Romney make their money by investing. That means corporate money is their money. When a corporation is giving 50% of their income to the government (Federal and state) that's their money being taxed.

Further, they have to swallow the taxes paid to their employees just as much as the employee does.

[Bolkonsky]

Oh god, please not one of these threads again. Is this TWC or Fox news?

What is this supposed to mean?

They pay plenty of other taxes (such as sales tax and various other state taxes etc). Also, in the US most people pay comparatively little income taxes in terms of % (unlike in Europe you don't have to pay 50%+ income tax),

Plenty of people pay sales tax, on top of income tax. Myself included.

Also, lots of rich people pay almost no taxes, either. See Buffet or Romney.

They are included under "US Citizens"

[Col. Tartleton]

Oh god, please not one of these threads again. Is this TWC or Fox news?

They pay plenty of other taxes (such as sales tax and various other state taxes etc). Also, in the US most people pay comparatively little income taxes in terms of % (unlike in Europe you don't have to pay 50%+ income tax),

Also, lots of rich people pay almost no taxes, either. See Buffet or Romney.

Or we could not be misleading and take a look at the big picture:

Mitt Romney has 3 homes: Belmont, Massachusetts; Wolfeboro, New Hampshire; San Diego California.

He's paying 5.3% for Massachusetts Income Tax in NH, 5% for New Hampshire, and 10.55% for California.

Then he's paying either a 35% or 15% at the Federal Level. Not to mention the far amount of sales taxes and other local and state fees I'm sure he pays quite frequently because he's probably spending a fair amount.

Obviously he's going to have write offs like anyone else, but it's not like he isn't paying taxes. That's misleading. Even if he pays a lower percentage he pays a lot more towards the treasury.

The problem in fairness is that other people are paying more, not that he's paying too little.

So you are saying if you are poor you shouldn't go to one of the top unis, even if you had the brains. And that's a good thing to boot. Nice.

Why would you want to go to a "Top" university? So you can pay 3x more for a school that is elite purely because they only accept people who are already significantly smarter than average?

It's been shown there is no difference between a Harvard drop out and a Harvard graduate in terms of their success. If you're at that level you don't need a degree, you're already competent, ambitious, and can learn on the fly.

[GrnEyedDvl]

Oh god, please not one of these threads again. Is this TWC or Fox news?

They pay plenty of other taxes (such as sales tax and various other state taxes etc).

Asty I have to take you to task on this.

The truth is the truth, sorry that very few places other than Fox actually report the real numbers even though you can get them yourself right from Obama's own website.

You are completely wrong. The first thing you have to do is make a distinction between federal tax and state tax, which you do not. Obviously federal taxes support federal spending, and state taxes support state spending. The two are completely different.

Yes, it is true that the bottom 50% of US tax payers pay no federal income tax at all. Its a fact, get used to it.

About 47 percent will pay no federal income taxes at all for 2009. Either their incomes were too low, or they qualified for enough credits, deductions and exemptions to eliminate their liability. That's according to projections by the Tax Policy Center, a Washington research organization.


In recent years, credits for low- and middle-income families have grown so much that a family of four making as much as $50,000 will owe no federal income tax for 2009, as long as there are two children younger than 17, according to a separate analysis by the consulting firm Deloitte Tax.

The federal taxes that they do pay, such as federal gasoline tax, are outstripped by federal spending. Severely outstripped. So much so that 49% of the population receives some form of federal aid.

Source 1
Source 2
Source 3

Also, in the US most people pay comparatively little income taxes in terms of % (unlike in Europe you don't have to pay 50%+ income tax),

Another statement that is simply just wrong, because you refuse to look at the other taxes being paid here even though you cite them above. The combined tax (federal, state, local) is well above 50% for the people that actually pay taxes.

Also, lots of rich people pay almost no taxes, either. See Buffet or Romney.

Another BS statement. There is a huge difference between capital gain and income. If you seriously need that explained to you I will, but the basics is that income is income, capital gains is the money you make on the money you invest AFTER YOU PAID FEDERAL INCOME TAX on your income.

As for the lie about Buffet I am sick to death of it. Hes completely full of when he says he doesnt pay enough taxes, and in fact is right this very minute involved in a lawsuit over taxes. Yes, thats right, the guy who says he doesnt pay enough taxes is being sued for $366 million for tax avoidance.

Funny how the guy on the "I dont pay enough taxes" bandwagon is doing everything he can so that his company can avoid paying taxes. People should quit repeating his lies and using it as a platform to raise someone else's taxes.

You will notice that I did not post any links to Fox when I gave you sources. That is to show you that the information is out there. The difference is that only Fox puts it on primetime television. MSNBC, CNN, etc, only put it in obscure web articles so they can say that actually "presented the news" and then their live idiots on TV ignore it and put their own spin on it.

Get off the Bash FOX News Bandwagon, and get the facts.

[chilon]

As for the lie about Buffet I am sick to death of it. Hes completely full of when he says he doesnt pay enough taxes, and in fact is right this very minute involved in a lawsuit over taxes. Yes, thats right, the guy who says he doesnt pay enough taxes is being sued for $366 million for tax avoidance.

This is an ad hominem argument. Simply because Berkshire (or NetJets) might be trying to avoid paying taxes does not invalidate Buffet's argument about earned vs. unearned income tax rate. I don't see you countering his actual argument in any way, just trying to discredit him as a person for a lawsuit involving a company owned by Berkshire. Even your phrasing is a bit misleading since its not Buffett personally being sued but the company NetJets.

[Justice and Mercy]

What other taxes are paid?

Sales (not much.)
State (less than Federal, can be deducted just as Federal can).
Social Security (this one hurts unless you're pretty far above the cap, I also know people who don't pay into Social Security but take money out, not retirees).
Medicare.
Corporate.

Am I missing anything?

The corporate tax, in certain states and combined with the Federal corporate tax, can be 50 percent.

[alhoon]

Sales (not much.)
State (less than Federal, can be deducted just as Federal can).
Social Security (this one hurts unless you're pretty far above the cap, I also know people who don't pay into Social Security but take money out, not retirees).
Medicare.
Corporate.

Am I missing anything?

The corporate tax, in certain states and combined with the Federal corporate tax, can be 50 percent.

How much is sales tax usually?
State tax?

Also I don't actually understand what "Corporate" tax is. Is it a special tax corporates pay?

In simple English, how much is usually the Federal income tax (that 50% of Americans don't pay) for an employee? Or Employees pay corporate tax too?
If it's far less than state+sales+SSec, then I don't see a big problem here.

[Justice and Mercy]

How much is sales tax usually?

Depends on the good and on the state.

I think it's generally below 10%, my state is 8.

State tax?

Depends on the state and also on the tax bracket, I'm not sure if the brackets are different in states than within the Federal government.

Also I don't actually understand what "Corporate" tax is. Is it a special tax corporates pay?

Yes, it's a tax on the income of corporations.

In simple English, how much is usually the Federal income tax (that 50% of Americans don't pay) for an employee?

This is a particularly complicated question, since how much taxes you pay depends not only on your income, but also on deductions. Most of that 50% actually DO pay taxes... until their refund comes in the mail and makes them whole (or better than whole) again or when they get other individual benefits.

Or Employees pay corporate tax too?

No. No individuals show up as paying corporate taxes, only the corporation.

If it's far less than state+sales+SSec, then I don't see a big problem here.

My state taxes are about 1/5th of my Federal taxes, and I actually paid nothing last year after deductions. Paying into Social Security contributes no more (from these folks) than they're going to get out of it, so again, no net gain.

For these 50%, only sales taxes actually stay within the government (mostly state).

[chilon]

48% of people over 25 years old that make money earn 25k$/year.
That's not a lot of money for a family, but more than enough for an individual.

25K more than enough for an individual? I wonder what the living costs are where you live because in cities like LA, SF and NYC 25K is most definitely not 'more than enough' for an individual. Thats about what college students live off while eating top ramen and mac and cheese every night while doing laundry at their parent's house.

[Justice and Mercy]

25K more than enough for an individual? I wonder what the living costs are where you live because in cities like LA, SF and NYC 25K is most definitely not 'more than enough' for an individual. Thats about what college students live off while eating top ramen and mac and cheese every night while doing laundry at their parent's house.

People need to learn to budget. I'm a college student living very easily off of a little less than 15k a year.

Helps that I worked from 16-18 to pay off my vehicle and put together some good savings.

[chilon]

People need to learn to budget. I'm a college student living very easily off of a little less than 15k a year.

Where? The cost of living is not the same across America. It varies greatly. Notice I said big cities like LA, SF and NYC. I don't know anyone in LA, SF or NYC that can "live easily" off 15K a year. For 15K a year, the only available housing is going to be in a dangerous neighborhood or hours away from your school or work (both of which incur additional costs in time and money and safety) .

BTW feel free to prove me wrong.

Pretend you are college student at UCLA. You can use Craiglist, Safeway or whatever source want to list me out the costs of living for a month as a student at UCLA. Also if you are going to reference some store please provide google maps to show the travel distance and mention how you are going to accomplish that travel.

If we were making this challenge really realistic (and representative of the situation of students who grew up low income in cities like Los Angeles or San Francisco) then we would have to include costs for your car and computer in that 15K a year.

[Justice and Mercy]

Where?

Phoenix, and you'll note that being such a big college city prices are pretty high where college kids live (lots of demand).

How do you cope? Find a relatively cheap but still good university, like ASU, attend the local community colleges for the first two years saving money and becoming a state resident, and then transfer to whatever university you had in mind.

If you still can't cope (because you're terrible at budgeting) student loans of only a few thousand a year can get you by, and if you're in a bad financial situation as it is the Federal government will give you some money.

If we were making this challenge really realistic (and representative of the situation of students who grew up low income in cities like Los Angeles or San Francisco) then we would have to include costs for your car and computer in that 15K a year.

My vehicle is paid off, because I wasn't a lazy bastard in high school (well, except regarding school itself), and a computer shouldn't cost you anymore than $1,000 even for a good laptop. Assuming you didn't get a "full-ride" scholarship and thereby need to spend your own money on rent you ought to be spending $1,000 a month at the very most even in relatively expensive areas on all household costs if you find a roommate. If you're not as smart as I am and don't have a vehicle paid off, ride a bike or carpool (I know I would drive someone to school if they took over gas expenses, which is certainly cheaper than buying a vehicle.)

Are prices too high for college students? Abso-fricking-lutely, precisely because people aren't expected to take care of it themselves like I do. People are loose with other people's money.

[chilon]

Phoenix, and you'll note that being such a big college city prices are pretty high where college kids live (lots of demand).

Ah! ASU. Right there in lovely Scottsdale. Isn't your stadium now named after the "University of Phoenix" ?

BTW Phoenix is the crappiest place on earth I've ever lived. You are aware that prices in Phoenix are not remotely similar to prices in California yes?

You can live off AZ's 101 way, way cheaper than you can live off CA's 101 (101 and 17 provides a lot of cheap housing you couldnt find anywhere near UCLA or CAL) .

How do you cope? Find a relatively cheap but still good university, like ASU, attend the local community colleges for the first two years saving money and becoming a state resident, and then transfer to what ever university you had in mind.

Well, ASU might be a "decent university" but its definitely not a great one. Its certainly not on the level of the best undergrad public schools such as the top UC schools, UMIch or the other top public universitites. At least 7 UC campuses are more challenging universities and rated higher than ASU. You do have one of the cheapest law schools in the country at ASU though.

If you still can't cope (because you're terrible at budgeting) student loans of only a few thousand a year can get you by, and if you're in a bad financial situation as it is the Federal government will give you some money.

K, anyone going to UCLA, CAL, Stanford or USC has much greater costs of living than you do in the Scottsdale area. Its not about "budgeting", its about the difference in the cost of living. I am very familiar with Phoenix, Scottsdale and AZ and none of the costs are remotely similar to California. So in short, its great you live in a state no one wants to live in so its hella cheap but don't think your situation applies to the majority of college students on the west coast.

[Vanoi]

This is what happens when most of your nations wealth is concentrated in the hands of 10%-20% of people. Leaves the other 80% with not much left.

[Nevins]

This is what happens when most of your nations wealth is concentrated in the hands of 10%-20% of people. Leaves the other 80% with not much left.

Right, because wealth is a finite sum and if someone has some that means others don't have it.

Pretend you are college student at UCLA. You can use Craiglist, Safeway or whatever source want to list me out the costs of living for a month as a student at UCLA. Also if you are going to reference some store please provide google maps to show the travel distance and mention how you are going to accomplish that travel.

Then don't live in a major city where the cost of living is so damn high. Live just about anywhere else where the costs are not so inflated and you can do fine. I go to school in relatively rural area of Illinois, I pay about $380 a month in rent/utilities (could be cheaper, I live next to campus and pay for speedy quick internet) and would say that I spend roughly $240 a month on groceries a month, and I eat fairly well, lots of dairy and meat fresh fruit and other things you end up paying a bit extra for. That comes out to my living expenses being $7440 a year, assuming I am here year round. Obviously that doesn't account for books and such, but that is why we have scholarships and grants. So if people are paying more than 15K a year to live somewhere, tough . Live somewhere cheaper.

You might think the poor in the US should pay more in income taxes. Maybe even a small amount like 5%. Regardless what do they receive back for their tax dollars? Less income to survive with and little to no added benefits from the state? Their transportation system prob already sucks, no buses or trains. No housing system. Medical care prob not so great either so why should the poor in the US pay income tax if unlike Europe they dont really receive anything back for it?

We have buses and trains in America pal, just FYI.

[Vanoi]

Right, because wealth is a finite sum and if someone has some that means others don't have it.

Pretty much.

http://en.wikipedia.org/wiki/Wealth_..._United_States

In 2007 the richest 1% of the American population owned 34.6% of the country's total wealth, and the next 19% owned 50.5%. Thus, the top 20% of Americans owned 85% of the country's wealth and the bottom 80% of the population owned 15%. Financial inequality was greater than inequality in total wealth, with the top 1% of the population owning 42.7%, the next 19% of Americans owning 50.3%, and the bottom 80% owning 7%.[7] However, after the Great Recession which started in 2007, the share of total wealth owned by the top 1% of the population grew from 34.6% to 37.1%, and that owned by the top 20% of Americans grew from 85% to 87.7%. The Great Recession also caused a drop of 36.1% in median household wealth but a drop of only 11.1% for the top 1%, further widening the gap between the 1% and the 99%.[7][8][9]

Its a big problem if you haven't noticed.

[chilon]

Then don't live in a major city where the cost of living is so damn high. Live just about anywhere else where the costs are not so inflated and you can do fine. I go to school in relatively rural area of Illinois, I pay about $380 a month in rent/utilities (could be cheaper, I live next to campus and pay for speedy quick internet) and would say that I spend roughly $240 a month on groceries a month, and I eat fairly well, lots of dairy and meat fresh fruit and other things you end up paying a bit extra for. That comes out to my living expenses being $7440 a year, assuming I am here year round. Obviously that doesn't account for books and such, but that is why we have scholarships and grants. So if people are paying more than 15K a year to live somewhere, tough . Live somewhere cheaper.

So if a kid from a low income neighborhood who is talented at physics and biology and gets into UCLA on academic merit to study neuroscience your solution is "tough , move somewhere cheaper"? Well considering the difference in out of state tuition and in state tuition that simply isnt a realistic option at all.

So ya, your tough luck response is just not a solution. You simply can't live that cheap in most metropolitan areas and if you are born in a specific state, the cost of attending out of state schools is much, much higher and essentially would negate any savings in living expenses.

What actually happens is low income kids just go into more debt to be able to afford the good school (because usually a person would be making a foolish, poor life choice in refusing to go to UCLA and attending Fresno State simply because living in Fresno is cheaper than LA).

Your post more or less supports my initial point: living on 15K a year is simply impossible in many metro areas let alone "living easily off 15K". You aren't denying the reality that 15K is not enough to live off in certain areas. You just propose a solution that is simply not viable, unrealistic and impractical for many people.

[Nevins]

So if a kid from a low income neighborhood who is talented at physics and biology and gets into UCLA on academic merit to study neuroscience your solution is "tough s--t, move somewhere cheaper"? Well considering the difference in out of state tuition and in state tuition that simply isnt a realistic option at all.

So ya, your tough luck response is just not a solution. You simply can't live that cheap in most metropolitan areas and if you are born in a specific state, the cost of attending out of state schools is much, much higher and essentially would negate any savings in living expenses.

What actually happens is low income kids just go into more debt to be able to afford the good school (because usually a person would be making a foolish, poor life choice in refusing to go to UCLA and attending Fresno State simply because living in Fresno is cheaper than LA).

So if we are using a limiting case where metropolitan areas are the only place where you can study, I guess you would be correct. A shame that many top universities are located in relatively rural areas, take University of Illinois at Urbana Champaign for instance, which are very similar to the area that I study in. All of this ignores the multitude of grants, scholarships, and so forth available for low income students. And hell, if out of state tuition is the issue then go live and work in that state for a year or so and declare residency. Problem solved.

Your post more or less supports my initial point: living on 15K a year is simply impossible in many metro areas let alone "living easily off 15K". You aren't denying the reality that 15K is not enough to live off in certain areas. You just propose a solution that is simply not viable, unrealistic and impractical for many people.

For some people, I apologize there isnt a one size fits all solution

@Azoth - still a problem with your whole picture, it assumes a finite size of wealth. Whatever percentage is owned by a particular demographic is largely irrelevant when the total "Wealth" is not a fixed amount. Is income disparity an issue? Yes. But you are looking at it entirely incorrectly.