The ranks of those whose federal income tax burden nets out to zero,or less,have grown in recent years due to two reasons: 1). temporary tax breaks to mitigate the economic downturn; 2). The tax code is filled with tax breaks to encourage economic activities the government favors.
Monday, April 18, 2011
45% don't owe U.S. income tax
The statistics show that nearly half of U.S. households end up owing no federal income tax for tax year 2010. However, the stats is often misunderstood and misinterpreted, like this one. It does not mean 45% households end up paying no taxes at all--they still need to pay other taxes such as state and local income taxes, payroll taxes, and property and sales taxes. Membership to the non-payer group is not restricted to the poor, 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.
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2 comments:
I think this article is mainly just trying to point out how ridiculous the tax code has become. Instead of people paying some set percentage of their income, they use countless exemptions and deductions to manipulate their income or return. I think it would make much more sense to just have progressive tax rates (lower than todays brackets) and do away with all the exemptions and credits.
I believe that the U.S. tax system is way too much complicated. It is good and bad at the same time.It is hard for individuals to escape taxes under this system, but the system itself requires lots of administration cost to keep track of everyone. In this article, it shows that nearly half of U.S households owing no federal income tax, which means that the rest half of households actually owe some federal income tax. And I believe that the tax system is too complicated might be a reason for that.
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