It may come as no surprise that a large percentage of American’s pay no federal income tax, and many people don’t pay any taxes at all – but it should be surprising just how high that percentage is, and how it is growing.
According to the Tax Policy Center, 47% of households pay no Federal income tax while 24% pay NO taxes at all and might actually get money back.
Contrast this with the other end of the spectrum: according to the Tax Foundation, the top 1% of households payed almost 40% of all income tax revenue in the country. Even worse, 20% of the federal income tax budget comes from the top 0.1% of households, which is less than 200,000 people out of a country of 300 million.
How is this possible? America has a tiered system, so the more you earn the higher percentage of your income you send to the government. This is different from a fair tax, where everyone pays the same percentage. Many families don’t make enough money to be charged at even the lowest tax bracket, while others shoulder the burden. This year more families than ever will be exempt from taxes, due in part to the $787 billion stimulus bill, and the original bailout plan, which also increases the money the government is spending.
How is this sustainable? There is constant debate in Congress over who should have to pay taxes, and how much. Right now the majority are leaning towards taxing the richest earners even more, while continuing to exempt more and more families. This system cannot be indefinite; eventually the “rich” won’t have any more left to give, government programs will still be underfunded. With the country’s budget continually expanding to include more and more programs, and with an ever shrinking pool of taxpayers, something will eventually snap.
Although I suppose we can continue what we have been doing by indefinitely printing more money…
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