Why Is Almost Half the Country Paying no Federal Income Tax?

One of the biggest tax debates that will likely always exist is whether or not the nation’s wealthy are paying enough in taxes? It’s easy for some to argue that they don’t but there are many factors that must be considered. Plus, all the while, nearly half of the country’s would-be taxpayers don’t actually pay any federal income tax at all. No, they aren’t guilty of tax fraud. These Americans are doing something that is perfectly legal and quite common.

In fact, would you be shocked to know that many of these individuals not only don’t pay any federal income tax, but they still receive a refund? According to the Tax Policy Center, it’s estimated that more than 45 percent of Americans owed no federal income taxes for 2015. According the Center, the number of total households that fall into this category has been increasing each year since 2011.

Some might think many of the wealthiest taxpayers are included among the more than 77 million people who fall into this category in 2015, but they don’t. About half of these households have no taxable income, period, and the other half qualify for enough tax breaks to help offset the amount they would owe. Therefore, these are individuals with a negative tax rate, not the nation’s highest earners.

The wealthiest 20 percent of the country, meanwhile, pays almost 87 percent of the nation’s entire federal tax bill. So, next time you hear someone claim that the wealthy don’t pay enough in taxes, just consider these numbers from the Tax Policy Center.

 

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