47% will pay no federal income tax

LaceWing

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I've been digging for a bit here and haven't found something, what is the average "cost of living" in the United States? Anybody? I'd even listen to Bueller.

"Cost of Living", not "what the avg. person is spending" since that gets into options, luxuries, whatever.

I just want to compare it to average income.

hmm, might be able to get it for some individual cities....

bankrate.com used to, and may still, have a comparison gadget that gave figures for every city. (useful for choosing where to retire, whether to relocate for a new job). Maybe they have national averages as well.
 

Haggis

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Given this

This is a pretty natural result of radical income disparity. The top 1% claim 23.5% of income, and the top 10% claim more than 50%.

how does this necessarily follow?

So, yeah, the ranks of the poor are growing, and the poor don't pay a lot of income tax.

Sorry, Greg, but I don't follow the logic here. If the top 10% of earners claim 50% of all income, that doesn't necessarily mean that any of the other 50% are poor.
 

GregB

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You're right, Haggis, the conclusion doesn't follow from the numbers I cited. So long as the low- and middle-classes are prosperous and aren't being sqeezed by stagnate incomes and rising cost of living, income disparity isn't a particular concern.
 

Gregg

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The tax loving politicians can't wait for the number to go from from 47% to 51%. Then if they can get those 51% to vote for them (not the easiest task mind you), they can soak the "rich" even more.

Now I wonder who is paying their "fair share"?
 

Williebee

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Yeah, there are a number of sites that do a comparison of "if you make this in Chicago, you'll want to make that to live in LA" or whatever. but it doesn't give me what I'm looking for.

Bottom line, I guess is: If the average income is 34K, is that enough to cover the average cost of living?
 

mscelina

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Well, let's figure it out.

Average rent for a two-bedroom home in anywher BUT the huge metropolitan areas? I'd say what--750-900 a month? (In Key West fifteen years ago, a studio apartment went for around 1500 dollars and the same in Manhattan while in Tennessee and Ohio it was 500 or so. Judging from rental prices in the paper (suburbs of metropolitan area) that figure is about right.) So, taking it at an average, we're looking at $9900 annually.

Average utilities, assuming people aren't idiots (just water/gas/electric)--let's say an average of $200 per month. Add another $2400 and we have $12,300 total.

Insurance--just for cars. Another what? $700 per year?
Car payment--just one. Let's see--maybe another $2400.
Food--even eating ramen a couple of meals per week, you're still looking at six grand a year.

So now we're at $21,400. Roughly.

Gas--well, this is fun. I'm thinking twenty bucks a week is low, but I'll go with it. $1040 a year. make the total $22,400.

So already, just on bare bones' basics, we only have about $11,000 left to spend.

If you have self-pay health insurance, that's another three grand a year. So now, there's only $8,000 left.

Cable and internet? Another $1500 a year minimum. We're down to $6500.

Yeah...thirty four thousand doesn't last long at all. And that doesn't even COUNT people with kids.
 

Gregg

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Right, making $34k in Denver, Co is not the same as making $34K in Picayune, MS but that is not the point.

When a business sets wages it doesn't ask if they are enough to cover the cost of living (a definition that really cannot exist, IMO). They ask how much can I pay and still be competitive in the marketplace.
I've run a business for over 30 years. It would be great to pay all our employees at least $40k a year. But if we did that, we'd be out of business in about 4 hours.

The real question is whether nearly half the people should get a free ride (as far as income taxes are concerned). And if it is fair for that to happen, then it is neither honest not honorable for politicians to complain that the rest are not paying their "fair share".
 

blacbird

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A free ride? hardly that. These people have overpaid their government in the amount taken out weekly for FICA. That's why the government 'owes' them.

It's hardly a free ride.

Remember also that anybody who earns more than $108,600 annually pays no FICA on anything above that cap. And all those below it pay a flat percentage.

I've pointed this fact out before, numerous times in discussions of taxation issues, and I now predict with confidence that we'll have some of what a British friend of mine used to call "Jesuitry" from others here trying to justify that situation.

caw
 

Christine N.

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Hang on there Don:

"in 2009, roughly 47% of households, or 71 million, will not owe any federal income tax"

It doesn't say "will not pay"-- it says will not owe.

I don't know about you, but a fair number of us have monies taking out of our paychecks and another group enjoy the thrill of quarterly estimated income tax payments.

I have never owed any tax; I usually get at least a partial refund. That's been true since I was 15.

Agreed. It says will not owe, not will not pay. There's a huge difference. Unless almost half of the US is making so little money as to NOT have any taken from their paychecks??

I don't always have state income tax taken from my pay because I make very little, but I ALWAYS have FedGov tax taken out. I don't OWE at the end of the year, because I've already paid.

OH, okay, I see what you're saying. But the software I have tells me how much in income tax I owe vs. how much I've paid=my refund. I ALWAYS owe something, but usually I've already paid it over the year. And I'm far from the income levels these people are talking about. We make under $50K/year, own a home and have a child, and yet still owe tax every year. We've just paid it in installments. We do get a healthy refund, but we never get it ALL back.

So I have no idea who this article is talking about, 'cuz it's not me.
 
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johnnysannie

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The figures are indeed disturbing but not because 47% of Americans are getting a "free ride" but because almost half of our nation doesn't make enough money to owe taxes.

As stated before, multiple times in this thread, the key word is "owe", not pay.

Every tax payer is entitled to several standard deductions, one for joint filing, one per child, and that is the bare minimum. If someone earns so little that after the deductions are taken, they owe nothing, then that isn't something to gripe and bitch and whine about.

And the quips regarding those who don't owe but get additional money back through Earned Income Credit, go look up how little they must make to qualify.

It's another sign of the trying economic times in which we live and some sympathy for the poor shmucks working their assess off in many two paycheck households to buy food, pay the utilities, put shoes on the kids, and other such necessities might not be misplaced.
 

Gregg

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A free ride? hardly that. These people have overpaid their government in the amount taken out weekly for FICA. That's why the government 'owes' them.

It's hardly a free ride.


I wrote free ride as far as income taxes are concerned. I agree that
FICA taxes are regressive. But as I understand the way it works, if the FICA earnings cap is raised, those people would be entitled to higher payments during retirement - placing even more strain on the system.
The unfunded FICA liability is HUGE - Congress has failed to do its job and many workers have failed to plan for their retirement. Social Security was never meant to be the only resource for retirement income.
 

TabithaTodd

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Quick question, bit of a derail here (sorry)

Do Americans have a version of our GST checks? We get GST\HST returns that you have to qualify for that are paid back by the government (if you over pay fed taxes on goods and services throughout the year) in quarterly checks on the 5th day of each quarter. Depends on your status (married, unmarried, kids no kids, income for that base year) on how much you get back. Today is the 5th day of the second quarter.

So do you have an equivalent to that?
 

robeiae

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http://en.wikipedia.org/wiki/Lucky_duckies

http://www.taxfoundation.org/research/show/542.html

http://www.taxfoundation.org/research/show/1410.html

http://www.politifact.com/truth-o-meter/statements/228/

This is a very complicated issue. But it is true that a healthy portion--let's say 40%--of the populace effectively pays zero in Federal income tax.

But the vast majority of these people earn under $20,000 a year. Also, the group is top and bottom heavy, with regard to age: many young people, many elderly people.
 

clintl

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You guys realize that a big part of the reason this percentage has increased is the recession? And that when the economy recovers, it will go back down? Right?
 

robeiae

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You guys realize that a big part of the reason this percentage has increased is the recession? And that when the economy recovers, it will go back down? Right?
To some extent. But the percentage of tax filers with zero liability increased throughout the nineties, so it is not solely about the state of the economy.

(see table 1 in my second link)
 

robeiae

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Yes. My parents are among them. And they're struggling financially even without having to pay federal income taxes.
I'm not suggesting they should be paying income taxes, at all. In fact, most of the elderly in this group have no income or a very limited income (possibly so low that they need not even file), so it makes perfect sense that they are not paying any income tax. Ditto for many in the group of younger peeps that aren't paying.

In short, the number--the 47% or 40%--that "aren't paying," is an unfair statistic (much like the 47 million uninsured stat). Big chunks of the people being counted have very logical--and very good--reasons for not having any income tax liability.
 

clintl

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I didn't think you were. I read your other post as agreeing that many of the people who are being counted as not owing federal income taxes having legitimate reasons for not owing them.
 

benbradley

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Quick question, bit of a derail here (sorry)

Do Americans have a version of our GST checks? We get GST\HST returns that you have to qualify for that are paid back by the government (if you over pay fed taxes on goods and services throughout the year)
GST - Goods and Services Tax. Is that like a federal/national sales tax? How is that collected? At point of sale? I'm trying to see how you could overpay.

Rereading the "returns that you have to qualify for" part, I think what you're saying is similar to the Fair Tax I describe below, except in the Fair Tax everyone qualifies for the refund check.

There have been a few national sales tax proposals in the US, the most popular and well-known is called the "Fair Tax" which would REPLACE all federal income (including the FICA/social security) taxes. Taxes on food and housing up to poverty level would be refunded in monthly checks to heads-of-households based on how many people live there, so no one would be taxed on the basic necessities of life.

Many US states and cities have sales taxes, and in many of those, necessities such as food and prescription drugs are exempt. I've not heard of any "refund checks" for sales tax.
in quarterly checks on the 5th day of each quarter. Depends on your status (married, unmarried, kids no kids, income for that base year) on how much you get back. Today is the 5th day of the second quarter.

So do you have an equivalent to that?
No, it doesn't appear so. Or not yet. It would/will be an uphill battle to get the Fair Tax passed, as it would take away a huge amount of political power from Congress (which now gets to do a lot of manipulation of the tax laws), but I could see where something like "qualifying for a refund on taxes based on status" could easily be passed.
 

TabithaTodd

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It depends on income whether you over pay through out the year, it's at point of sale. We have GST, PST and now HST.

That's Goods and sales tax (federal)
provincial sales tax (province)
and harmonized sales tax (federal)

The only one of the three that we do not see back is provincial from what I understand.

http://www.servicecanada.gc.ca/eng/goc/gst_credit.shtml

The GST/HST Credit program issues to Canadians with low and modest incomes all or part of the GST/HST they pay. It provides information on application procedures, eligibility, payment of the GST/HST credit and procedures to follow in case of overpayment.

Delivered by: Canada Revenue Agency (CRA)

Eligibility Information

GST/HST credits are calculated based on the recipient’s net income added to the net income of his or her spouse or common-law partner, if applicable, minus any amount the recipient, his or her spouse or common-law partner reported for the Universal Child Care Benefit on line 117 of the tax return. The number of dependent children registered for the Canada Child Tax Benefit or the GST/HST Credit is also used in the calculation of benefits.
To be eligible for benefits, the applicant must be 19 years of age or older, have (or previously had) a spouse or common-law partner, or be (or previously was) a parent and live (or previously lived) with their child.
GST/HST credit recipients must inform the Canada Revenue Agency of all changes, such as a change in the number of dependent children or marital status, in order to have the payments adjusted. The credits can be adjusted during the year.
Other criteria may apply.