Half Of Americans Don’t Pay Any Taxes

-Submitted by David Drumm (Nal), Guest Blogger

It’s a common claim from the Right, but it’s not true. Senator John Cornyn (R-Texas), in a Senate floor speech,  claimed “Fifty-one percent — that is, a majority of American households — paid no income tax in 2009. Zero. Zip. Nada.” At least he used the often omitted “income” adjective. However, those individuals still pay payroll taxes, like Social Security and Medicare, sales taxes, and often property taxes.

When Republican Senators give speeches complaining about someone not paying enough tax, you can be sure of two things: one, they’re not talking about corporations and two, they’re not talking about the wealthy. If you’re not a member of either of those two groups, hold onto your wallet. The Republican hatred of increasing taxes doesn’t apply to everyone’s taxes, just those who can afford to them get re-elected.

A report from the Tax Policy Center examines the facts. Here’s an overview:

  • 23% pay nothing because they’re poor. For example, a couple with two children earning less than $26,400 will pay no federal income tax this year because their $11,600 standard deduction and four exemptions of $3,700 each reduce their taxable income to zero.
  • 10% are elderly and pay nothing because their Social Security benefits are exempt from federal income taxes.
  • 7% pay nothing thanks to provisions in the tax code designed to benefit low-income families: the earned income tax credit, the child credit, and the childcare credit account.

The other 6% benefit from tax-exempt interest, itemized deductions, education credits, other credits; and reduced rates on capital gains and dividends.

That’s whom the Republicans want to tax: poor families and the elderly, those least able to afford the tax increases. The shocking aspect of these facts is the existence of such a huge number of people that are so poor, they balloon the percentage up to 46%.

H/T: Kevin Drum, Roberton Williams, Donald Marron.

80 thoughts on “Half Of Americans Don’t Pay Any Taxes

  1. Individuals that do not pay any Income Tax have no “skin in the game” and will continually vote for representatives that protect this gift to them. I keep hearing politicians say that “everyone” should sacrifice something but it seems they only talk about the “rich” and not the people that do not pay anything. Except in very special circumstances, these people should pay some amount of Income Tax. I believe that 3%-5% of their Gross Income would be reasonable. I do not have specific numbers and wonder how much this would amount too.

  2. While we are at it, there is another set of society that pays zero income tax and even fewer taxes over all than that “50% of americans” or “big corporations” is your churches, especially the mega churches and the so-called “non-profit” companies. Why should some multi-billion dollar business get a free ride – funded by the taxpayers simply because they call themselves a church?

    Why can’t we treat a church like what it is – a business. Allow them to be fully involved in politics, but tax them like any other entity. Allow them to deduct for true charitable actions but still charge them with property taxes, sales tax, and all the other taxes we are burdened with. Your small local church won’t be that effected as they won’t generate that much income.

    Your mega churches with their concert halls, Disney-like amusement parks, television networks, and more… well they would have to pay their fair share.

  3. What are your thoughts on changing out tax methods. Switching to a flat tax, a “Fair” tax, or a sales-tax-only method has their plusses and minuses. Personally I am not sure about the fairness or effectiveness of some of these tax ideas. However the idea of a system of tax laws that an 8-year old would understand and would in theory greatly reduce tax fraud is appealing

  4. Thanks to the U.S.Supreme Court, large corporations have many of the same rights as individual citizens. Therefore, it seems to me that on that
    basis alone, they should pay corporate income taxes. During the 50’s, when co’s did pay such, people still bought plenty of GE products, and
    the company became larger. Their employees enjoyed good wages, and
    the entire country was better off too.

  5. K: “…I have and, frankly and fortunately, people like that are only a tiny fraction of the group defined as the “poor” in this country. Further, these people must not be taking advantage of the lavish benefits we provide to our poor. Another failure of government.”

    From my reading it seems that the failure is engineered to deny benefits to some good extent. That’s a different debate though.

    Personally, I think the number of the desperately poor isn’t known. If you’re not on a list you can’t be counted. The folks that make the lists make them selectively. Same with employment. Once you fall off the unemployment rolls you’re not counted as unemployed and if you’re working catch as catch can you’re not on any list to begin with but you’re probably seriously diminished economically. That doesn’t even factor in the people that never make it on to the lists, the mentally ill and other walking wounded that don’t receive any benefits.

    I never begrudged the government paying any earned benefit or welfare. When I had the rare occasion to look through the window into the pockets of our economic wasteland I was younger and more naive. It pissed me off greatly. I was always amazed that such places weren’t simply burned to the ground y the inhabitants and the fires didn’t spread outward from there. I realized though that the government paid ‘welfare’ to buy peace.

    Give people just enough (and then talk badly about the recipients) to keep them from a full on class uprising. Between welfare and the availability of legal and illegal drugs the perpetual and growing underclass could be dissuaded from warfare. Add to that modest gains for many and the growing penchant for incarceration and here we are. Spiritual reasons aside I am still big on entitlements, benefits, ‘welfare’, upward mobility, and expansion of the same, for purely practical reasons.

    The desire to kill these programs by many in the government is dangerous IMO should they succeed. It is also dangerous to condition a couple of generations to easy credit, living from credit card payment to credit card payment and taking on economic burdens that are too good to pass up but are unsustainable and then crash that bus.

    In fact, I think the changes in the internal security landscape over the last 10 years has been in anticipation, to some good extent, are in anticipation of just that eventuality. I say that because we have not come to this place in time and economy by accident and no magic corner on the economy has been turned or will be soon. There’s still wealth to be looted and until it’s all gone the theft won’t end. It’s not like our government, at any level has any pretense of not being paid hands for the brigands.

  6. Henman:

    “not to mention the flashbacks to your imaginary days as Gauleiter of Warsaw.”

    I dont think kderosa would have been a seig heiler, just a hunch based on his/her posts. kderosa is definitely not a collectivist.

  7. Jeff, your idea that tax exemptions for churches should end is something I would endorse. Once a church hits the magic number of what it takes to pay a pastor a wage commensurate with his/her duties then taxes should kick in at the corporate rate. My reading of the separation clause didn’t reveal to me any requirement that all churches should not be taxed, only that no discrimination against nor discriminatory advantage to some take place.

  8. LK

    my mother would tell me “if you can’t say something good, then keep your mouth shut.”

    i try, but then that little devil monkey on my shoulder whispers in my ear…

  9. “The National Commission on Social Security Reform was created in response to the actuarial unsoundness of the system.”

    It was said to do that but that was never its real purpose. It was there to give cover to raising taxes on the middle class, thus funding a huge buildup in defense spending, while actually appearing not to raise taxes. A hoax in which both parties participated.

    “The Social Security Trust Funds were moved “off-budget” so that the funds earmarked for the Social Security system would be tracked separately from the rest of the budget. Payroll taxes were 11.4%.”

    however, the money taken in was used for general purposes and not just for social security and therein lies the problem.

  10. @Mike Spindell

    “It was there to give cover to raising taxes on the middle class, thus funding a huge buildup in defense spending, while actually appearing not to raise taxes. A hoax in which both parties participated.”

    It raised taxes on all people earning income, not just the middle class.

    And, that extra revenue went to funding all sorts of nonsense, not just defense spending. In any event, without that increase, assuming it can still be clawed back, the SS system is still actuarially unsound. How doo you propose making it sound? Reduce benefits? Or taxing others to pay for your retirement benefits?

    “and therein lies the problem”

    Indeed.

  11. I’m talking about from the author of the article. Plus anything else from those posting that didn’t listen in their economics class in school.

  12. Ok I must put my 2 cents in because I have personal experience with what it is like to be poor In America and what it is like to live on $1 and $2 a day here and squat.

    This is from year 2000, prices have increased since then.

    Life: forget trying to find metal for housing.. It won’t happen. In fact, trying to make any sort of permanent looking dwelling is a good way to get kicked off land. I found myself a person who had a camp, and I moved in. We were scavengers in the most absolute sense and never begged, or else $1 to $2 a day wouldn’t exist. Through scavenging, $1 to $2 a day was an average find.

    Shelter: tents and tarps, scavenged or bought (more later)
    Camp: lots of time spent digging ditches and erecting tarps to avert major flooding issues
    Cooking: open fires not allowed, no cookware
    Police: stopped and questioned often, couldn’t evict me due to me squatting on private property with no complaint from owner
    Food: $0.25 bought a cup of ramen, hot water donated by whataburger. $0.35 got me A slice of cooked bacon. $0.75 unlimited coffee. $1.07 got me a small burger or breakfast burger. Usually got the coffee, which curbed hunger most and could be consumed for hours with unlimited cream and sugar. Bananas were cheap but unsatisfying. When findings were lower than $0.50 ate from dumpsters. Dumpster food was always always highly processed. (never eat perishable or unpackaged foods)
    Insects: major issue.
    Heat/ac: spent a lot of time at Walmart, whataburger, and library during hot periods. Cold was no problem (Texas)
    Area: semi rural
    Security: none, took 24 hrs to have my bike stolen from the middle of the woods
    Now, had this camp been large or if open fires or permanent structures established, there’d be crackdowns
    Also, tolerance was good due to low population of visible homeless and a lack of begging in area. It worked because there weren’t many. More in another post about big city homeless life

  13. Ok now for what squatting in or near a major city is like:

    1. High population of squatters means harsh treatment. Businesses often refuse service to homeless. Same with publuc factories like libraries.
    2. Begging is outlawed but rampant. Beggars are frequently fined and arrested. My bf had his drivers license blocked from renewal due to anti homeless laws. It cost $600 and 3 days in jail to get it back.this doesn’t include the moths he’d already spent in jail for the crimes of sign holding, camping or sleeping in prohibited areas or at prohibited hours, urinating and defecating outdoors in areas bathrooms were not public for homeless use
    3. Police harassment, confiscation, intimidation, questioning, rampant
    4. High amounts of construction led to homeless camps frequently being razed
    5. Rights, nO legal rights to speak of, and hate crimes numerous. One guy saw a car change lanes at high speeds in the middle of the night just to hit his dog.
    6. Again, no open fires or cooking allowed
    7. Police often confiscated or discarded precious documents, such ass.. They threw my bf’s wallet in the woods. It had his SS card. His identity was subsequently stolen,
    8. Due to begging, lots of fast food and processed food. Hunger was rare. Emergency rooms were only source of medical care. People released with any condition needing clean conditions saw worsening and life threatening conditions develop. Urban homeless never lived on less than $2 a day though,
    Conclusion: it is feasible if you find the right location with a low homeless population, lax laws, and don’t mind dying from open infections, mosquito carrying diseases, never having fresh vegetables, and still live close enough to many businesses
    At least if u get water it will be clean. On the other hand, squatter cities in 3rd world countries is urban and large and full of commerce. You can’t be homeless squatter and a fruit vendor here. 100% of your income is from employment, begging, or drug hookups
    , and stealing

  14. My conclusion here is to merely state, squatting is not feasible here while simultaneously keeping ones civil rights.

    The low rent concrete block housing that exists in 3rd world countries for the poor working class are illegal here, due to federal intervention. The working poor are priced out of housing that matches their incomes due to housing regulations. The only two choices really are to set aside civil rights and squat and possibly die of simple infections, or accept welfare and live in modern housing that is above your means.

  15. Again, I’m saying it is housing regulations and not welfare that is to blame for the inflated lifestyles Of the poor, it is housing regulations and all of the permits and bookkeping necessary for people to run small businesses on the fly. Welfare protects people from losing their civil rights because federal and lical regulations prohibit the lifestyles that come with extreme poverty

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