The Tax Policy Center has released its latest statistics about who pays — and who does not pay — federal income taxes. According to its numbers, 46.4 percent of “tax units” in America will pay no income tax this year.
More than half of those non-paying units make less than $16,812. More than 80 percent make less than $33,542. Some will no doubt focus their outrage on those lower-income folks, but I’m more intrigued by the fact that 3,000 “tax units” with incomes above $2.18 million paid no income tax. All in all, 446,000 “tax units” with incomes above $103,465 paid no income tax on that money, a figure that includes capital gains taxes.
Now let’s put that in context, historical and otherwise.
First, personal income taxes account for just 44 percent of federal revenue. Payroll taxes account for 37.1 percent of revenue this year, and those taxes are paid by almost all of these “tax units” who don’t pay income taxes, with the exception of those whose main income is Social Security, pensions or investments.
Second, while the percentage of revenue raised through the personal income tax has remained relatively stable since World War II, the mix of revenue from other sources has shifted noticeably. Compared to 60 years ago, the payroll tax has tripled in importance as a revenue source, while the corporate income tax has fallen by two-thirds.
Let the call to raise taxes on the poor, the elderly on fixed income and lower-income earners begin.
– Jay Bookman