Posted by on Wednesday, May 2, 2012
You may have heard the claim that about half of Americans pay no Federal Income Tax. That’s a true fact. Slightly less than 50% of all households paid no Federal Income Tax in 2012. The number one reason should come as no surprise. It’s because they have low incomes.
I'd like to remind those who whine that, "46% of people don't pay Federal Income Taxes", that, in fact, that group pays exactly what a Millionaire pays on that same first share of their earned income. In other words, if you were a couple with two children who earned $32,000 in 2011 and paid no Federal Income Tax, no couple with two children who earned over $1,000,000 dollars paid taxes on their first 32K either.
Many Seniors also account for part of the 46% who pay no Federal Income Taxes. They too, pay nothing on the first 32K in benefits, and then are taxed on any amount over that.
(NOTE: Any couple with two children earning less than $32,000 paid no Federal Income Tax this year because their $11,900 standard deduction and four exemptions of $3,800 each reduce their taxable income to zero. The basic structure of the income tax simply exempts subsistence levels of income from tax. If you are single, you can earn up to $25,000
before owing federal income tax...same thing for singles earning over a million bucks a year...their first 25K is fed tax free.)
(NOTE: All workers still pay FICA, no matter how much or little they earn, which is 7.5% of their income. If they are self-employed (such as yours truly, or say, a home daycare provider), they pay double that. In addition, there are many other taxes in our fair land that everyone pays regardless of income, including sales taxes, state income taxes, excise taxes, and property taxes. These are regressive taxes. In other words, the less money you earn, the greater percentage of your income these taxes take up.)
If you ask someone with an income of over a million dollars a year if he would rather make far less and pay less (or even nothing) in taxes, he will tell you of course not.
Lastly, if you truly wish for families of 4 earning 32K to pay Federal Income Taxes, you are asking for that same amount that YOU first earn to be taxed as well, thus increasing YOUR overall tax burden!
Just something to keep in mind.
Tags: federal income taxes. taxes