Remember when scandal struck the Mitt Romney campaign when he was “caught” on video saying that 47% of Americans wouldn’t vote for him, as they pay nothing into the system and are dependent on government?
Ok – so all those not paying income tax aren’t dependent on government, but why didn’t anyone care that Mitt Romney’s statistic was correct? That 47% has shed a few points over the years, but as MarketWatch reports, it hasn’t changed all that much.
An estimated 45.3% of American households — roughly 77.5 million — will pay no federal individual income tax, according to data for the 2015 tax year from the Tax Policy Center, a nonpartisan Washington-based research group. (Note that this does not necessarily mean they won’t owe their states income tax.)
Roughly half pay no federal income tax because they have no taxable income, and the other roughly half get enough tax breaks to erase their tax liability, explains Roberton Williams, a senior fellow at the Tax Policy Center.
That could frustrate you this tax season, depending on which side of the pie you’re on.
When it comes to the federal income tax, the rich don’t pay the majority of the taxes, they pay all the taxes. As sourced from economist Mark Perry, here’s what each quintile pays into the federal government, on net balance:
And here’s another way of looking at the numbers: the amount received in transfers per dollar paid in taxes. It’s pretty clear whose getting the largest ROI on their taxes:
Depending on your perspective, there could be another reason why it’s terrible that 45% of Americans pay no Federal income tax.
It means that we still have 55% to go.