1. 44% of Households Don’t Pay Any Federal Income Tax
2. Lion’s Share of Federal Income Taxes Paid by the “Rich”
3. President Trump to Unveil Tax Cuts as Early as Wednesday
4. Despite Record Tax Revenues, Budget Deficits Remain Huge
Income Tax Day came and went last week without a great deal of fanfare. Most Americans who owed income tax to the government for 2016 either filed their tax returns and paid their bill to Uncle Sam last week, or filed for an extension and paid their estimated tax, as many do each year. Nothing new there.
What you may not know, however, is that almost half (44%) of American households paid no income tax to the federal government in 2016. That’s according to the latest data from the non-partisan Tax Policy Center which were released last week. You probably didn’t hear about that since the media largely ignored it.
The fact is that just over half of all households (56%) paid all of the federal income taxes in 2016. The rest didn’t pay anything and many actually got money back from the government in the way of refunds, subsidies or other federal benefits. Does that surprise you?
This trend of a higher percentage of households paying nothing in federal income taxes is troubling. Our national debt is fast approaching $20 trillion, the largest of any nation in history. If the debt continues to increase, it spells another financial crisis in the not-too-distant future.
Today, we’ll look at the Tax Policy Center’s latest report showing that 44% of households now pay zero federal income taxes, and I’ll give you a deeper look into the 56% who still pay federal income taxes.
Next, the mainstream media continually bombards us with claims that the “rich” don’t pay their fair share of federal income taxes. This is simply not true, and has not been true for decades, as I will point out today. On the subject of income tax rates, President Trump says he will unveil his tax reform plan as early as tomorrow – I’ll have some comments below.
Finally, the White House Office of Management and Budget just released new budget deficit projections for the next five years. The result: the deficits will average over $500 billion a year during the 2017-2021 period. Details to follow.
44% of Households Don’t Pay Any Federal Income Tax
Last Tuesday, April 18, was Income Tax Day in America. That’s the date by which all Americans who owed income tax in 2016 had to either file their income tax returns and send a payment to the IRS, or file for an extension to submit their income tax returns for 2016 later this year.
Yet millions of Americans have discovered that they don’t owe Uncle Sam a dime. According to 2016 data from the non-partisan Tax Policy Center, 44.3% of American households – upwards of 76 million – didn’t pay any income tax to the federal government last year. This year that number is expected to be roughly the same.
Most of these people aren’t paying income taxes because they either don’t have any income that is taxable (many fall below the poverty line), or because they get enough tax breaks so as to not owe the government money.
Common tax breaks include the child tax credit, the earned income tax credit (EITC), and the exclusion of some or all Social Security income, explains Roberton Williams of the Tax Policy Center.
Of course, this doesn’t mean that this group is completely tax exempt. According to Williams, “Roughly 2/3 of those paying no federal income tax work and pay federal payroll taxes that support Social Security and Medicare; about 60% of the rest are elderly and thus retired and not working; and most of the rest have very low incomes.”