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Tags: tax policy | households | federal | income tax

Tax Policy Center: 77.5 Million Households Are Not Paying Federal Income Taxes

Tax Policy Center: 77.5 Million Households Are Not Paying Federal Income Taxes
(Dollar Photo Club)

Monday, 12 October 2015 04:38 AM EDT

The Tax Policy Center estimates that 45.3 percent of households will pay no federal income taxes this year, The Daily Caller reports.

Roughly half of that number do not make enough money and the others qualify for deductions and credits that reduce their tax burden to zero, the Wall Street Journal reports.

In total, 77.5 million individuals and married couples — or tax units. as they are defined by the TPC — won’t pay income tax this year out of a total of 171.3 million, the Tax Policy Center, or TPC, reports.  A previous estimate was for 66.2 million out of 163.8 million tax units not paying income tax in 2015.


A project of the Urban Institute and the Brookings Institution, the TPC believes the number of people paying no federal income taxes will fall over time though not as quickly as was first thought, the Daily Caller explained.

It “doesn’t mean more Americans have moved off the tax rolls … the higher estimate reflects new and better estimates of the number of Americans who don’t file tax returns," Roberton Williams, Sol Price fellow for TPC, said.

"Those additional non-payers were there all the time — we just failed to count them," he writes in a blog post.

But "just because people don’t pay federal income tax doesn’t mean they don’t pay any tax. In fact, nearly everyone pays something. Three-fifths of those who don’t owe income tax work and thus pay Social Security and Medicare payroll taxes," he writes.

"And almost everyone pays state and local sales taxes, excise taxes, or some other levy. Check out our whiteboard video that explains what’s really going on and why the number of people paying no federal income tax will fall," he writes.

The Tax Policy report comes, ironically as Louisiana Governor Bobby Jindal, trying to revive his ailing Republican presidential bid, unveiled a tax plan whose goal is to make all citizens pay at least some federal income taxes.

"If we have generations of Americans who never pay any taxes, it will be very easy for them to turn a blind eye to absurd government spending and to continue to allow our government to bankrupt our nation," Jindal said, according to the Journal.

Jindal's plan seeks to compress the current seven income tax brackets to three, with those in the lowest rung paying a 2 percent rate, the Journal reported.

It would also eliminate most deductions, including those that allow millions to pay nothing in federal income taxes.

Jindal's proposal takes a different approach from those of several of his Republican rivals.

Businessman Donald Trump, the front-runner in the Republican race, announced a plan last month in which individuals earning less than $25,000 a year and married couples earning under $50,000 would pay no income tax.

Candidate Jeb Bush, a former Florida governor, proposed a tax plan last month that he said would eliminate income taxes for roughly 15 million more people.

Jindal wants to eliminate corporate taxes, the estate tax and the Alternative Minimum Tax, as well as all the taxes in the Affordable Care Act, the Journal said.

He would scrap itemized deductions, except for some of the biggest and politically sensitive, such as those for charitable contributions and mortgage interest, the newspaper said.

Jindal estimates his changes would reduce federal tax revenue by 22 percent over 10 years, the Journal reported.

© 2022 Thomson/Reuters. All rights reserved.


Economy
The Tax Policy Center estimates that 45.3 percent of households will pay no federal income taxes this year. Roughly half do not make enough money and the others qualify for deductions and credits that reduce their tax burden to zero.
tax policy, households, federal, income tax
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2015-38-12
Monday, 12 October 2015 04:38 AM
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