We hear a lot about low-income American families who pay no federal income taxes, but in 2009, the last year for which figures are available, there were 20,752 Americans with incomes above $200,000 who also paid no federal income taxes. There were six people among the 400 richest Americans, taking in more than $200 million a year, who paid no taxes. The number of untaxed, high income taxpayers increased sharply during the past decade. Here are the year-by-year figures for people incomes of $200,000-plus a year who paid no taxes.
1999 – 1,605
2000 – 2,328
2001 – 3,385
2002 – 2,959
2003 – 2,824
2004 – 2,833
2005 – 7,184
2006 – 8,252
2007 – 11,600
2008 – 22,256
2009 – 20,752
I don’t want to exaggerate the significance of this. The 20,752 were around 1/2 of one percent of the 4 million (out of 140 million) Americans who filed tax returns showing incomes above $200,000 a year. Some may have escaped taxes for one year only because of some extraordinary event. I don’t know how many escaped taxes year after year. And you have to take inflation into account. Back in the 1970s, $200,000 was real money.
Even so, I am more bothered about rich people not paying taxes than I am about poor people not paying taxes. I don’t think it would be a burden on somebody with a $200,000 income to pay taxes at the same rate as I do. On the other hand I’m not eager to tax somebody trying to support a couple of children on an income of $15,000 a year, which is what you would get working minimum wage, or to take away the Earned Income Tax Credit, would would raise that income to a hardly-lavish $20,000 a year.
Recall that the Earned Income Tax Credit and the Child Care Tax Credit were originally conservative Republican proposals as substitutes for welfare. Instead of taxing people or giving them public assistance, why not reward work? That seems reasonable to me. What doesn’t seem reasonable is exempting people from taxes because they get their income from sources other than actual work.
Click on The Fortunate 400 for an article by David Cay Johnson on taxes paid by the 400 top U.S. income earners. Only a few pay no taxes at all, but on average they are taxed at very modest effective rates.
Click on A Broken Tax Code for a report by the Committee for a Responsible Federal Budget.
Click on Rich Nontaxpayers for an article by Bruce Bartlett in the New York Times.
Click on The Minimum Wage and Making Work Pay for the case for raising the minimum wage and the earned income tax credit.
Tags: Earned Income Tax Credit, HIgh Income No Taxes, Income tax
Phil Ebersole's Blog 
June 11, 2012 at 11:57 pm |
The tax code is so complex it becomes a disadvantage to the poor and an advantage to the rich. You can hire a good tax consultant and find loopholes that save you millions.
That is why I wonder if a flat sales tax (fair tax) based on consumption would be better. That way everyone is taxed based on what they buy – no matter if they are illegally in the country, rich, or poor.
On the other hand it is true that this would still be a discount for the rich b/c one millionaire doesn’t consume 100x more than a person of average wages even if they earn 100x more. So the rich would still benefit more from something like this – possibly unjustly.
Maybe if we adjusted the fair tax in some way to have lower taxes on stables such as food and other non-luxury items? Then again – there is the argument that a tax like that would unjustly hurt producers of luxury items…
All of these arguments are why the issue of taxes tire me. We should just reduce the tax burden, reduce the size of Government, and everyone would be better off.
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