Income Taxes: Millions of Americans Pay Zero

As the April 15 tax filing deadline looms, each year the media cranks out stories about the certainty of death and taxes.  No one can yet escape death, but it is getting easier for many Americans to avoid paying taxes.  In fact, an estimated 70 millions households will pay no federal income taxes this year.

Despite the tax burden falling on fewer and fewer Americans, the Democrat Party and their spiritual leader President Obama continue to preach that the wealthy are not ponying up their "fair share" of federal income taxes.   This lie exists only because the media allows it to fester unchallenged.

The top one percent of income earners, those with an adjusted gross income of $434,000 or more, shelled out more than 38 percent of all the federal income taxes paid into the Treasury.  These figures are courtesy of the Internal Revenue Service based on 2012 tax data, the latest numbers available.

IRS data shows that the top five percent of wage earners, those with incomes over $175,817, anted up 59 percent of the income taxes paid. Another way to look at the statistic is to realize that five percent of Americans account for nearly six of every ten dollars confiscated by the IRS.

The bottom 50 percent of earners, those with incomes under $36,000, contributed 2.8 percent of all the federal income taxes amassed by the federal government.  That fact belies the Democrat lie that the so-called poor and middle class are shouldering the nation's income tax burden.

The National Tax Limitation Foundation (NTLF), using Congressional Budget Office (CBO) data, calculated that the bottom 90 percent of earners, who took home 52 percent of all income, paid less than 30 percent of the federal income taxes.

The non-partisan Tax Policy Center has issued studies showing that deductions, exemptions and credits allow millions of Americans to zero out their tax bill.  Nearly 67 percent of those who owe no taxes fall into the bottom 50 percent of wage earners.

"Many people who pay no income tax simply have too little income to owe tax," explains Roberton Williams of the Tax Policy Center. "The rest benefit from the tax code's many preferences."  Those include deductions for earned income, childcare and educational expenses.

The center forecasts that slightly more than 43 percent of U.S. households will pay no federal income tax.  That number was 46 percent in 2011.  The center estimates that the number will continue to decline as the economy improves.  But there are no guarantees that will happen.

Income tax deniers are quick to point out that many households that pay no tax contribute to the federal government with paycheck deductions for Social Security and Medicare taxes.  But there are still 14 percent of households that pay none of those taxes.  Zero.

In fact, an analysis of CBO data shows the bottom 20 percent of earners actually have a negative tax rate of 7.5 percent, meaning they are net takers when it comes to federal income taxes.  The next 20 percent pay a negative tax rate of 1.3 percent, reports the NTLF.

By way of explanation, the CBO points out that a negative income tax rate means an individual has refundable tax credits that exceed the income tax liability owed to the government. These households often receive money from government programs, such as food stamps and rent assistance.

Individual tax payers contribute most of the trillions of dollars spent by the federal government.  In 2014, individuals accounted for 51.8 percent of the federal taxes collected by the IRS. Businesses' share of the tax burden was 9.7 percent. Social Security taxes made up the balance.

With the battle over the 2015 budget on the horizon, Americans who still pay taxes would be well advised to get involved in the debate. Once Congress approves the budget, the certainty remains that individuals will be on the hook for paying the lion's share of the government's spending tab.