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Thread: CNN: 45% don't owe U.S. income tax

  1. #1

    CNN: 45% don't owe U.S. income tax

    [QUOTE]45% don't owe U.S. income tax

    [IMG]http://i2.cdn.turner.com/money/2011/04/14/pf/taxes/who_pays_income_taxes/chart_fed_tax.top.jpg[/IMG]

    NEW YORK (CNNMoney.com) -- The fastest way to make the tax-averse incensed is to tell them that nearly half of U.S. households end up owing no federal income tax when all is said and done.

    But like most statistics, it is often misunderstood -- and, in the case of those trying to stir political outrage, misrepresented.

    For tax year 2010, roughly 45% of households, or about 69 million, will end up owing nothing in federal income tax, according to estimates by the nonpartisan Tax Policy Center. Some in that group will even end up getting paid money from the federal government.

    That does not mean such households end up paying no taxes whatsoever. For instance, those in the group still pay other taxes such as state and local income taxes, as well as property and sales taxes.

    And the group doesn't necessarily get off scot-free when it comes to payroll taxes -- which support Social Security and Medicare.

    More than two-thirds -- or 49 million of the 69 million households -- pay payroll tax. Of those, 34 million end up paying more in payroll taxes than they get back on their federal return. The other 15 million pay payroll tax but they get enough refundable credits to offset what they paid. (Get a 'receipt' for your taxes)

    Contrary to what many assume, membership in the group isn't restricted to the poor.

    It's true that the vast majority of the 69 million households make less than $50,000 -- with very heavy representation among households making less than $30,000.

    But nearly 5 million households in the group make somewhere between $50,000 and more than $1 million.

    Very high-income households can fall into the non-payer group if they get their income from tax-exempt bonds or overseas sources for which they get foreign tax credits, according to Roberton Williams, a senior fellow at the Tax Policy Center.

    How did we get here?

    The ranks of those whose federal income tax burden nets out to zero -- or less -- have grown in recent years for two reasons.

    The first is temporal.

    The downturn in the economy has hurt household incomes and various stimulus bills offered Americans temporary tax breaks to mitigate the economic pain -- thereby further reducing their tax bills.

    The second is more systemic.

    The tax code is filled with hundreds of tax breaks to encourage economic activities the government favors, tax experts say. For instance, the law offers credits to supplement the wages of low-income workers, help families pay for college and encourage them to buy homes and have children.

    Temporary tax policies, such as the Bush-era tax cuts and the tax breaks passed under President Obama, have also increased the ranks of the non-payers.

    If most tax breaks were removed, the Tax Policy Center estimates, the percentage of households with no federal income tax liability would drop to 27% from 45%.

    Why the tax-free matter
    The question of who pays and who doesn't is not a trivial matter. And Washington policymakers may soon start to deal with the issue in a more explicit way as the national debate over how to rein in future deficits kicks into high gear.

    Obama's bipartisan debt commission, for instance, has recommended that reforming the tax code can help not only with deficit reduction but with creating a simpler, more modern, and economically efficient tax system. (Take CNNMoney's debt quiz)

    Since the hundreds of tax breaks on the books reduce federal revenue by an estimated $1.1 trillion every year, the debt panel suggested eliminating most if not all of the credits, deductions and personal exemptions, and use the newfound revenue to do two things: pay for lower income tax rates and help reduce deficits.

    Generating bipartisan support for tax reform is easy. But getting to "yes" on the details and figuring out who should pay more, less or nothing at all will be a much tougher fight.

    But it's a fight lawmakers are gearing up to have.[/QUOTE]

    More grist for the ongoing Tax Code debates.

  2. #2
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    I don't want to lose mortgage interest.

    Losing state taxes in corrupt states like NY would hurt also.

  3. #3
    Isn't this what the revolution was all about? No benifits without representation.

  4. #4
    how about a VAT? can't dodge a consumption tax

    the current tax code is something like 60,000 pages long it's way too complex with too many deductions and loopholes but changing that is a pipe dream.

    Rather add something on top of it... this isn't diving we don't get points for style, all that matters is does the gov't break even or not?

  5. #5
    [QUOTE=bitonti;4003250]how about a VAT? can't dodge a consumption tax

    the current tax code is something like 60,000 pages long it's way too complex with too many deductions and loopholes but changing that is a pipe dream.

    Rather add something on top of it... this isn't diving we don't get points for style, all that matters is does the gov't break even or not?[/QUOTE]

    A National Sales Tax is something alot on my side like the idea of. Not neccessarily a VAT (which hits every level of production), but it gets a similar level fo support to a Flat Income tax, generally.

    Trouble is, a NST or VAT must be in place of a Natl. Income Tax, not an addition.

    And you and I know Bit, there are many who will work to make it a strait-up addition, or at best, eliminate Income Taxes for a while, then add them back on top of the VAT.

  6. #6
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    [QUOTE=Warfish;4003260]A National Sales Tax is something alot on my side like the idea of. Not neccessarily a VAT (which hits every level of production), but it gets a similar level fo support to a Flat Income tax, generally.

    Trouble is, a NST or VAT must be in place of a Natl. Income Tax, not an addition.

    And you and I know Bit, there are many who will work to make it a strait-up addition, or at best, eliminate Income Taxes for a while, then add them back on top of the VAT.[/QUOTE]

    Do I need to start another FairTax thread? ;)

  7. #7
    How about a tax of 10% across the board for everyone. From Rich Man to Poor Man. Oops Women to!

  8. #8
    [QUOTE=JetPotato;4003706]Do I need to start another FairTax thread? ;)[/QUOTE]

    here's the problem with a flat tax

    it takes away the gov't tool to make people act a certain way

    for example income that goes into retirement accounts are tax excempt

    that's the gov't's way of incentivizing people to save for their own retirements. We all agree that's a good thing. (Conservatives and Liberals can agree that it's better for people to fund their own retirement than the gov't to do it in the form of SS).

    there are other aspects of the tax code that move in this manner. writeoffs for college tuition. Writeoffs for taking care of your kids. Write offs for mortgage interest. For whatever reason the gov't wants these things to happen. the gov't wants people to own homes, go to college and care for their kids.

    But make it all flat tax, these instruments go away. that's why it will never be a straight flat tax. It takes the power of incentive away from congress. Congress doesn't make votes that result in it getting less power.

    I guess Russia can have a flat tax cause over there you do what Putin says or you end up in the gulag.

  9. #9
    [QUOTE=MnJetFan;4003903]How about a tax of 10% across the board for everyone. From Rich Man to Poor Man. Oops Women to![/QUOTE]

    how about 50%? that's the other part of the flat tax argument i don't get... people want a flat tax but they want it to be very very small. What if there was a flat tax and it was 50%?? we'd be pining for the days of the progressive income tax.

  10. #10
    Since we are obviously bad shape financially as a country AND since everyone seems to think GWB was such a jerk, why not:
    1. Eliminate ALL the "Bush era tax breaks". [B]Every one of them[/B]. The highest earners go back to 39.6%. Eliminate the 10% bracket. Reinstate dividends being taxed at the marginal rate. Capital gains at only a 50% exclusion. Inheritance tax at the $1 million threshold. Reinstate the marriage penalty under Clinton.
    2. Cut the military budget by 2%. Easy to do. Don't outsource so much, ala Halliburton. Cut the remaining gov budget by 4%. It's loaded with fat.

    That way "everybody shares the pain" which is Obama's new famous line.

  11. #11
    [QUOTE=bitonti;4003924]here's the problem with a flat tax

    it takes away the gov't tool to make people act a certain way[/quote]

    :eek:

    Holy hell Comrade Bit-Stalin, as if that was a BAD thing?

    It is not the Governments place to force it's citizens to "act a certain way", the entire thought is destestable and anathema to personal freedom and liberty.

    No, we do not "all agree" that the State having this power is a "good thing". I'm against that no matter which party wants to impose it's tyrany of "state knows best" on me.

    [quote]I guess Russia can have a flat tax cause over there you do what Putin says or you end up in the gulag.[/QUOTE]

    Just kills you that the Govt. doesn't have that power here, doesn't it?

    Man have you veered way left or what.

  12. #12
    [QUOTE=Warfish;4003955]
    It is not the Governments place to force it's citizens to "act a certain way", the entire thought is destestable and anathema to personal freedom and liberty.[/quote]

    Warfish you think you'd be happy in a Mad Max thunderdome world with no rules, no taxes and no gov't... but the reality is that sucks. People need a reason to save for their retirement. Law and order are very underrated. Cause we don't just shoot em in the head when they get old. Someone has to take care of these people if they don't take care of themselves.


    [QUOTE=Warfish;4003955]
    No, we do not "all agree" that the State having this power is a "good thing". [/QUOTE]

    I didn't say gov't power is a good thing. i said that they already have this power and aren't giving it up. I said people saving for retirement is a good thing.

  13. #13
    I'm against a flat tax and I'm against taxing to manipulate behavior. Taxes should be revenue to run our government that's it. The Government shouldn't be using the tax code to manipulate behavior or pick winners and losers in our market economy.

    Get rid of all deductions have a few rates based on income. Tax savings, cap gains and consumption at the same low rate.

    The wealthy should pay more they have more property to protect they have a Judicial system in place to arbitrate property rights and disputes and most of us recognize we need a social safety net for the poor among us.

    That doesn't mean class warfare, punitive taxing that discourages risk and wealth creation or a social safety net that guarantees a cradle to grave middle class floor for the entire society.

    We need wholesale tax reform and we are going to get it because the Democrats can't allow the Bush tax cuts to expire without dealing with the ATM which along with inflation will crush the middle class. They aren't going to get it without bringing along Independents and Republicans.

    There is reasonable compromise but until we face up to the reality that we can't police the world with ongoing wars, have a defense budget that rivals the entire rest of the world combined and a social safety net that more and more looks like a middle class social compact we are screwed.

    The Demographics are clear. We either put in a system where individuals continue to have great opportunity or we will become more and more dependent on people we have nothing in common with deciding our future.

  14. #14
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    [QUOTE=Winstonbiggs;4003980]I'm against a flat tax and I'm against taxing to manipulate behavior. Taxes should be revenue to run our government that's it. The Government shouldn't be using the tax code to manipulate behavior or pick winners and losers in our market economy.

    Get rid of all deductions have a few rates based on income. Tax savings, cap gains and consumption at the same low rate.

    The wealthy should pay more they have more property to protect they have a Judicial system in place to arbitrate property rights and disputes and most of us recognize we need a social safety net for the poor among us.

    That doesn't mean class warfare, punitive taxing that discourages risk and wealth creation or a social safety net that guarantees a cradle to grave middle class floor for the entire society.

    We need wholesale tax reform and we are going to get it because the Democrats can't allow the Bush tax cuts to expire without dealing with the ATM which along with inflation will crush the middle class. They aren't going to get it without bringing along Independents and Republicans.

    There is reasonable compromise but until we face up to the reality that we can't police the world with ongoing wars, have a defense budget that rivals the entire rest of the world combined and a social safety net that more and more looks like a middle class social compact we are screwed.

    The Demographics are clear. We either put in a system where individuals continue to have great opportunity or we will become more and more dependent on people we have nothing in common with deciding our future.[/QUOTE]

    The Norwegian/Danish faction couldn't agree more. ;) Well said.

  15. #15
    [QUOTE=bitonti;4003976]Warfish you think you'd be happy in a Mad Max thunderdome world with no rules, no taxes and no gov't.[/quote]

    [QUOTE=Wikipedia]A straw man is a component of an argument and is an informal fallacy based on misrepresentation of an opponent's position.[1] To "attack a straw man" is to create the illusion of having refuted a proposition by substituting it with a superficially similar yet unequivalent proposition (the "straw man"), and refuting it, without ever having actually refuted the original position.[1][2][/QUOTE]

    [IMG]http://dancleary.typepad.com/.a/6a00e5540ff48a88340112790efe3028a4-800wi[/IMG]



    [QUOTE]People need a reason to save for their retirement.[/QUOTE]

    They have a great reason in a non-Social Welfare Society, and that reason is Personal Responsabillity.

    [QUOTE] Law and order are very underrated.[/QUOTE]

    Not by me Mr. Strawman.

    [QUOTE]Cause we don't just shoot em in the head when they get old.[/QUOTE]

    Lol, nope, no Straw Men round here, amirite? Just check all the trheads where I proudly demanded we shoot old people in the head, they're EVERYWHERE!

    [QUOTE]Someone has to take care of these people if they don't take care of themselves.[/QUOTE]

    :rolleyes:

  16. #16
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    [QUOTE=Warfish;4004146][IMG]http://dancleary.typepad.com/.a/6a00e5540ff48a88340112790efe3028a4-800wi[/IMG]




    :rolleyes:[/QUOTE]

    I knew you were an expert on strawmen. You proved it many times. ;)

  17. #17
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    Is this indicative of a disappearing middle class?

    I'm quite certain there has been articles posted this year on this forum showing the gap between the rich and poor at its largest since the '20s.

  18. #18
    [QUOTE=Warfish;4004146]
    Lol, nope, no Straw Men round here, amirite? Just check all the trheads where I proudly demanded we shoot old people in the head, they're EVERYWHERE!

    [/QUOTE]

    you misread my post. I never said the power of the gov't was great. I said people saving for their retirement was a good thing. Apparently we can't agree on that.

  19. #19
    [QUOTE=long island leprechaun;4004107]The Norwegian/Danish faction couldn't agree more. ;) Well said.[/QUOTE]

    With the exception of the craddle to grave middle class guarantee and the demographics issue pretty much.

  20. #20
    [QUOTE=bitonti;4004181]you misread my post. I never said the power of the gov't was great. I said people saving for their retirement was a good thing. Apparently we can't agree on that.[/QUOTE]

    What you said:

    [QUOTE]People need a reason to save for their retirement. Here's the problem with a flat tax. [B][U][COLOR="Red"]It takes away the gov't tool to make people act a certain way[/COLOR][/U][/B][/QUOTE]

    Make people act a certain way.

    Re-read that phrase however many times it takes to get what it actually means, and what your support of it says about your beliefs.

    Make people act a certain way. Make them. No matter what. No matter their own choice, decisions or objections. Make them.

    You, my friend, have become a VERY big support of State-based "make them" policies of late. It thus rings hollow when you claim you're not for "State power".

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