The half of American’s don’t pay taxes myth

I assume I’ve addressed this before, but if so, I couldn’t find the right terms to search my own blog.  Even so, tonight I really feel it’s worth repeating.  Just was in the on-line forum for my public policy class where two students independently asserted that “half of Americans don’t pay any taxes.”  Obviously, the right wing has had a lot of success with this particular false meme.  Of course, if you refine that to “federal income taxes” you’d be right, but, firstly, that’s actually a short-term phenomenon, as the number is usually closer to 35-40%.  More importantly, there’s plenty of good reasons for this.  Naturally, CBPP has been on the case:

  • Most of the people who pay neither federal income tax nor payroll taxes are low-income people who are elderly, unable to work due to a serious disability, or students, most of whom subsequently become taxpayers. (In a year like 2009, this group also includes a significant number of people who have been unemployed the entire year and cannot find work.)
  • Moreover, low-income households as a whole do, in fact, pay federal taxes. Congressional Budget Office data show that the poorest fifth of households as a group paid an average of 4 percent of their incomes in federal taxes in 2007 (the latest year for which these data are available), not an insignificant amount given how modest these households’ incomes are — the poorest fifth of households had average income of $18,400 in 2007. [4]The next-to-the bottom fifth — those with incomes between $20,500 and $34,300 in 2007 — paid an average of 10 percent of their incomes in federal taxes.
  • Even these figures understate low-income households’ total tax burden, because these households also pay substantial state and local taxes. Data from the Institute on Taxation and Economic Policy show that the poorest fifth of households paid a stunning 12.3 percent of their incomesin state and local taxes in 2010.[5]
  • When all federal, state, and local taxes are taken into account,the bottom fifth of households paid 16.3 percent of their incomes in taxes, on average, in 2010. The second-poorest fifth paid 20.7 percent. [6]

But why let facts get in the way of the wonderful sense of superiority that comes from resenting all those damn freeloaders.

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About Steve Greene
Professor of Political Science at NC State http://faculty.chass.ncsu.edu/shgreene

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