Who Pays Taxes?


Rick Warren tweeted earlier this week that "HALF of America pays NO taxes. ZERO. So they're happy for tax rates to be raised on the other half that DOES." Joan Walsh fisks him. Kevin Drum dug up this chart from a Tax Foundation report (pdf), which reveals the truth:

The blue bars don't cherry pick just the federal income tax to make a dumb partisan talking point, they show how much each group actually pays in total taxes. Bottom line: Poor people pay less in taxes than rich people, as they should, but it's very far from zero. The midpoint of that first quintile is about $11,000, and even a household earning that little pays about $1,400 in taxes. The household in the second quintile, earning a munificent $30,000 per year, pays $7,000 in taxes. I know we live in a post-fact environment, but those are the facts.

46% of Americans pay (pdf) no federal income taxes, which is where this talking point comes from. Donald Marron breaks this down:

Low incomes (or, if you prefer, the standard deduction and personal exemptions) account for fully half of the people who pay no federal income tax.

The second reason is that for many senior citizens, Social Security benefits are exempt from federal income taxes. That accounts for about 22% of the people who pay no federal income tax.

The third reason is that America uses the tax code to provide benefits to low-income families, particularly those with children. Taken together, the earned income tax credit, the child credit, and the childcare credit account for about 15% of the people who pay no federal income tax.

Aaron Carroll puts this in persepective:

That leaves about 10% of people who manage to use other deductions and/or loopholes to get under the tax line. Some of them make a decent amount of money; I personally know some. But about 90% of people who don’t have to pay federal income tax don’t because they are poor, perhaps with children, or elderly and on fixed incomes. And, they still pay other taxes.