With the U.S.' deadline for filing income tax returns for 2012 upon us today, we thought it might be interesting to find out which Americans aren't really paying a fair share of all the income they earn in the form of income taxes.
The answer may be found in our chart below, which we previously featured here:
Although built using data from 2009, newer data does not significantly alter this picture....
Here's what we wrote back on 26 April 2011:
Theoretically, all the area under the blue total aggregate income curve is subject to federal income taxes. In practice, deductions and tax credits exempt large portions of low-to-middle income earners from the burden of paying federal income taxes. The Tax Policy Center estimates that 47% of all income earners in 2009 either paid no federal income taxes or received back more from the federal government than what they would have had to pay, if not for the deductions and tax credits they could legitimately claim.
The chart above is inaccurate in that it significantly understates the effective total amount of income that Americans at the low end of the income spectrum accumulate, who benefit from government assistance programs that add to the incomes they earn from wages and salaries, or through unearned income sources like interest, dividends or Social Security benefits. This effective additional income is derived from such welfare programs as food stamps (aka the "Supplemental Nutrition Assistance Program"), Medicaid, Medicare and other health care-related subsidies, housing assistance, as well as job training and education assistance to name just a few tax-free income boosting government welfare programs.
We would argue that these effective-income boosting benefits should be reported on U.S. personal income tax returns. At least, if one truly believes in honesty and fairness in discussing who is really not paying a fair share of the income tax burden in the U.S.
More Tax Day Fun at Political Calculations!
- The 100th Anniversary of U.S. Income Taxes - our tool will let you do your taxes today as if it were 1913!
- How Many Pages Long is the U.S. Tax Code in 2013? - for the last week, the single most common question that U.S. lawmakers on Capitol Hill have asked us!
- Redesign Your Own Flat Income Tax - our tool let's you design and test drive your own alternative flat income tax program!
- The Flat Tax the U.S. Effectively Already Has - it's basically true, but don't take our word for it - the Congressional Budget Office says so!
- The Tax Burden of ObamaCare - starting soon in 2014!
- The Transformation of Student Loans Into Taxes - if you cannot discharge it through bankruptcy, and if the size your payment is determined by the size of your income, and if you owe it to the federal government, it's not really debt - it's an income tax!