Chuck Marr and Chye-Ching Huang in September 2012 from the Center on Budget and Policy Priorities reported on the percentage of people that pay taxes. The types of taxes are broken into different categories from income taxes, to payroll taxes, to state and local taxes.
Federal Income Taxes
- In 2007, 40 percent of households did not owe federal income tax.
- In 2009, 51 percent of households did not owe federal income tax.
- In 2011, 46 percent of households did not owe federal income tax.
- According to the report, the higher percentage of households post-2007 that did not owe federal income tax is due to the economic downturn significantly increasing the number of people with low incomes. The 2007 “figure more closely reflects the percentage that do not owe income tax in normal economic times.”
Payroll Taxes
- In 2007, 14 percent of households did not pay federal income tax or payroll tax.
- In 2009, 17 percent of households did not pay federal income tax or payroll tax.
- In 2007, “the poorest fifth of households paid an average of 4.0 percent of their incomes in federal taxes”
- The average income of the poorest fifth was $18,400 in 2007.
- “The next-to-the bottom fifth — those with incomes between $20,500 and $34,300 in 2007 — paid an average of 10.6 percent of their incomes in federal taxes.”
State and Local Taxes
In 2011, the poorest fifth of households paid 12.3 percent of their incomes in state and local taxes.
Total Taxes (Including Federal, State, and Local Taxes)
“When all federal, state, and local taxes are taken into account, the bottom fifth of households pays about 16 percent of their incomes in taxes, on average. The second-poorest fifth pays about 21 percent.”
To read the entire article, click on Misconceptions and Realities About Who Pays Taxes.
According to the Tax Policy Center, 37.8% of tax units do NOT pay income taxes. In fact, 4.1% of tax units that make over $100,000 annually, do not pay income taxes. Tax units can be singles, couples, or families. The table may be found by clicking on Distribution of Tax Units with Zero or Negative Individual Income Tax Liability by Cash Income Level, 2009.
According to the Congressional Budget Office, even though a tax unit might not pay income taxes, they would still pay other federal taxes, including Social Security, Medicare, and excise taxes. The table may be read by clicking on Effective Federal Tax Rates, 2004 and 2005.
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