47% Of Americans Pay No Income Taxes

Media / Blog

47% Of Americans Pay No Income Taxes

Prev

4 Lies Investors Will Tell Themselves Again

May 31, 2015

It's pretty interesting to look at who pays income tax in America and who does not. That is until you realize you might just be in the top 1% of all wage earners in America and the differential in the percentage of taxes you pay relative to overall adjusted gross income does not match at all when you add up the numbers. What's truly amazing about the data below is that the top 1% of wage earners is about $380,354 and the top 5% of wage earners is about $159,619, but the top 5% account for 58.72% of the taxes. When compared to their share of adjusted gross income, the top 1% are almost double the income taxes against their actual AGI contributed into the mix.

Federal Income Tax data

WHO ARE THE 47% WHO PAY NO FEDERAL INCOME TAXES?
(this excerpt was taking from www.financialsamurai.com)

The Tax Policy Center's Donald Marron said they fall into three main groups:

  1. The working poor. The earned income tax credit and the child credit can help families making $50,000 or more pay no taxes or get money back. About 60% of those not paying income taxes do contribute to payroll taxes, meaning they must have some source of earned income.
  2. The elderly. An increased standard deduction for those over 65, and an exemption on part of Social Security earnings, means that many older Americans pay no income taxes. Please remember though that the elderly have paid their dues through decades worth of federal taxation during their careers.
  3. The low-income. A family of four claiming only the standard deduction and personal exemptions pays no federal income tax on its first $27,000 of income.

Whether you think this is fair or not is up to you. But you should start to ask yourself how it will be possible to actually pay off $18 trillion dollars in debt when basically half of America doesn't pay into the system at all currently.

It's likely that taxes on the wealthy will only continue to go up and I won't be surprised to see more takeaways including even potentially disqualifying yourself from social security benefits if you make too much money in retirement. It will be important under the current tax code that you do your best to not only plan on the most tax efficient way to accumulate your assets, but also get really clear about how you will distribute your assets in the most tax efficient manner down the road or the tax man just might keep stalking you for many years to come.

Written by: Ted Jenkin
Request a FREE consultation: www.oxygenfinancial.net


If you would like to receive more information on making smart money moves for your future, be sure to contact us today!

Next

Why “Conditional Receipt” Is A Must When You Apply For Life Insurance

Sign Up

Sign up for our exclusive Sunday Paper with a weekly market commentary, insightful personal finance blogs, and life changing education guides.

Email sign up

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. oXYGen Financial is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra AS do not provide tax or legal advice. https://Bit.ly/KF-Disclosures

This site is published for residents of the United States only. Registered Representatives of Kestra IS and Investment Advisor Representatives of Kestra AS may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed. Not all products and services referenced on this site are available in every state and through every representative or advisor listed. For additional information, please contact Kestra IS Compliance Department at 844-553-7872.

PLEASE NOTE: The information being provided is strictly as a courtesy. When you link to any of the web sites provided here, you are leaving this web site. Kestra IS and Kestra AS makes no representation as to the completeness or accuracy of information provided at these web sites. Nor is Kestra IS and Kestra AS liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technologies, web sites, information and programs made available through this web site. When you access one of these web sites, you are leaving our web site and assume total responsibility and risk for your use of the web sites you are linking to.