[wjossey]

Important to note to non Americans that this does not mean that 61% paid no taxes, it’s that they didn’t pay a specific type of tax (income at the federal level).

Individuals likely still paid Social Security taxes, Medicare taxes, and potentially state and local taxes (which vary wildly). Most states also have sales taxes as well, and some local municipalities have surcharges as well.

And, lastly, we do have property taxes, which can be quite significant in large parts of the country. Even if you’re a renter, these costs are often indirectly passed on to you.

So, while federal income tax may have been less of a burden last year, there was likely still lots of taxes that each of these individuals paid.

Disclaimer: This post isn’t meant to be a statement of support or criticism of taxes. Just trying to highlight the many ways we pay taxes beyond federal income tax.

[bluedevil2k]

To build off your details, many Americans also received a net payment back for federal taxes through the Earned Income Tax Credit (effectively a negative income tax).

[rufus_foreman]

>> Important to note to non Americans that this does not mean that 61% paid no taxes

"Federal income taxes do not include payroll taxes. The Tax Policy Center estimates that only 20% of households paid neither federal income taxes nor payroll taxes. And “nearly everyone” paid some other form of taxes, including state and local sales taxes, excise taxes, property taxes and state income taxes, according to the report."

-- https://www.cnbc.com/2021/08/18/61percent-of-americans-paid-...

[300bps]

You’re correct but don’t take into consideration things like child tax credits.

I have family members that pay a total of $400 in tax yet receive a $9,000 or more “refund” due to various credits.

So yes, there is a sizable portion of the population that literally pays a negative tax rate even when factoring in all of the taxes you mentioned.

[michaelmrose]

This is probably because the top 10% earns almost half of income in America, the next 40% of America shares about 38% and the bottom HALF of Americans share less than 12% between them.

As far as wealth this bottom half also holds 2% of the net worth.

It should be unsurprising that people who have nothing aren't paying much.

[refurb]

Sure, but you’re ignoring just how progressive the US federal tax system is.

And in fact, many of the state income taxes are too. A few states have flat taxes (but with healthy exemption), the other have brackets that steeply increase.

[michaelmrose]

You mean except for all the taxes other than income tax such that people making french fries often pay a bigger percentage of their incomes to taxes than billionaires?

[adventured]

> You mean except for all the taxes other than income tax such that people making french fries often pay a bigger percentage of their incomes to taxes than billionaires?

That's a false claim. The recent propaganda being pushed - eg by ProPublica - about billionaires supposedly paying low income taxes, of course, didn't center on income taxes at all. It intentionally reframed the premise to be that billionaires weren't paying enough taxes on their wealth (assets).

For example this article con line from ProPublica:

Headline: "You May Be Paying a Higher Tax Rate Than a Billionaire"

Summary: "A new ProPublica analysis of a trove of IRS documents revealed that the richest 25 Americans pay a tiny fraction of their wealth in taxes."

So I might be paying higher taxes on my unsold stock holdings than Bezos is on his unsold stock holdings? Of course not. ProPublic is being intentionally deceptive.

The billionaires are paying a small share of their wealth in taxes every year. They pay high income taxes, when they generate high incomes. Wealth isn't income. ProPublica knows that separation, they know how the tax system works, they spun the con regardless for propaganda points. ProPublica is trying to argue in favor of wealth confiscation policies, while lying and pretending they're arguing in favor of the billionaires paying higher taxes akin to paying higher income taxes. The spin is remarkable for just how disingenuous it is.

Bezos isn't paying enough income tax on his unsold Amazon stock holdings? Golly gee.

[pseudalopex]

The ProPublica article examined effective income tax rates. It just mentioned wealth briefly. You left out the next sentence. "But even if you use the most conventional yardstick — income — the wealthiest still pay low rates."[1]

Long term capital gains are taxed less than all but the lowest income brackets. Social Security tax is capped. And the article used the IRS definition of total income tax. So it ignored taxes on goods and services.

[1] https://www.propublica.org/article/you-may-be-paying-a-highe...

[rootusrootus]

Federal income tax is somewhat progressive. All of the state taxes, last time I checked, are regressive. For a while the least regressive was Oregon (which has a progressive income tax) and the most regressive was next door, Washington, which uses a sales/use tax instead.

[credit_guy]

>> All of the state taxes, last time I checked, are regressive

Wait, what? The state tax in New York State is certainly progresive: it starts at 4% if you earn less than $8k, and goes up to 10.9% on incomes above $25 MM [1]. California is much more progressive: 1% for less than $9k, 13.3% above $1 MM [2].

[1] https://www.nerdwallet.com/article/taxes/new-york-state-tax

[2] https://www.hrblock.com/tax-center/filing/states/california-...

[rootusrootus]

I assume you are looking only at income tax, excluding any other state and local taxes? The effective tax rates in all states are regressive:

https://itep.org/whopays/

[onlyrealcuzzo]

This shouldn't be surprising.

There have been millions of people on SNAP & HUD & Medicaid with no income for a long time. There's just more programs and a lot more people now.

This time, however, it seems like these new programs are quite massive and are more "want" based than "need" based.

It's quite obvious people with no income and kids "need" money. It's less obvious to me that people who had kids for years, and still have their jobs, suddenly need $1k per month. I don't think anyone would debate whether this $1k is improving their lives.

[tyingq]

Good list. I'd add federal fuel taxes to that as well.

[senectus1]

thanks for that, I immediately thought this and wondered how the hell this could be sustainable.

[throwaway0a5e]

Don't forget sales taxes, taxes on specific goods, fees for required government services and all the other regressive taxes that states impose.

[refurb]

Is social security and Medicare a “tax”?

Maybe Medicare since what you contribute is only partially linked to the benefit.

But social security is basically a public pension plan. What you contribute determines your benefit. You can even calculate the benefit yourself. No different than a private pension plan.

[toast0]

I think Medicare is clearly a tax, it can't be an insurance program because there's no connection between 'premiums' and benefits.

Social security is nominally a government sponsored pension, but the payout ratios are weird, and it's compulsory, so I feel it's fair to call it a tax.

Same with at least the employee portion of compulsory unemployment insurance. Maybe that's generally an actuaraily sound program (I think the employer contributions may be), but in times of economic stress, payments increase and I don't think that's covered by premiums. I know there's a cap on benefits, but I'm not sure if there's a cap on contributions? Anyway, seems similar to Medicare and I'd call it a tax, too.

[pwned1]

Although there is a "social security trust fund," it's an accounting fiction. Functionally the money you contribute goes to the general US treasury fund and payments to beneficiaries come from the general US treasury fund. It's really just a pay as you go entitlement.

[ghaff]

>What you contribute is what you get out.

There's some correlation between in and out but the government isn't figuratively putting the money into a savings account for you.

[gwbrooks]

It meets the tests of a tax: You can't opt out and the payee has a legal right to use the threat of violence against you in pursuit of payment.

[headShrinker]

> What you contribute is what you get out

That simply can’t be because what you get out is based on how long you live, which is a ‘known, unknown’

[megaman821]

Of those 61% that paid no taxes, I am willing to bet a vast majority of them will take more benefit out of Social Security and Medicare/Medicaid than they ever put it. Even looking at the total tax burden the US and states barely take anything from the lowest two quintiles.

[fred_is_fred]

Thank you for this. This is often positioned as "paid no tax" and often people in these categories paid a very large percentage of their incomes in sales and other taxes.