43% pay no federal income taxes
Updated On: Aug 29 2013 01:13:28 PM CDT
A little more than 43 percent of U.S. households -- or 70 million homes - will end up owing no federal income taxes for 2013.
That's down from recent years because of an improving economy and the expiration of various tax cuts that were passed after the 2008 financial crisis, according to the nonpartisan Tax Policy Center, which published its latest estimates on Thursday.
The households with zero income tax liability are not evenly distributed across income groups. The majority this year -- nearly 67 percent -- have incomes below $30,000.
"Many people who pay no income tax simply have too little income to owe tax. The rest benefit from the tax code's many preferences -- exclusions, deductions, exemptions, and credits -- that zero out the tax they would otherwise pay," said Roberton Williams of the Tax Policy Center.
But that doesn't mean there aren't any nonpayers among high-income folks. The Tax Policy Center estimates that a little more than 1 percent of nonpayers have six-figure incomes or more.
Specifically, an estimated 798,000 households in the nonpayer group make between $100,000 and $200,000 a year; 48,000 have incomes between $200,000 and $500,000; 3,000 make between $500,000 and $1 million; and 1,000 households bring in more than $1 million.
A misconception about those who end up owing no federal income taxes -- especially those with low incomes -- is that they pay no taxes at all. In fact, most pay payroll taxes to support Medicare and Social Security as well as sales taxes and state and local taxes.
However, there is a subset of households that still end up with no liability when income and payroll taxes are combined. The Tax Policy Center estimates 14.4 percent of all households -- or 23 million -- fall into this group. "And two-thirds of them are elderly," Williams noted.
The issue of Americans with zero tax liability is a politically charged one. Mitt Romney created an uproar on the presidential campaign trail last year after he incorrectly characterized this group as people who are "dependent on government" and "believe they are victims."
Lawmakers, too, often complain about the issue, even though Congress itself boosts the ranks of the nonpayers by passing new tax breaks and failing to review whether the old ones still make sense.
But there may be less fodder for heated rhetoric in the years ahead. The Tax Policy Center estimates the percentage of households without federal income tax liability will continue to drop, falling as low as 34 percent of households by 2024.
Copyright 2013 by CNN NewSource. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Capps Aide Arrested in Near-Fatal DUI Hit and Run
Highway 154 Open, One Dead in Early-Morning Crash
Neighbors React to Actor Paul Walker's Death
Wrong-Way Driver Shot by Officers During Wild Goleta Pursuit
15 Mexican Drug Cartel Dealers Arrested
Officials Identify Driver in Goleta Pursuit
Vandenberg Successfully Launches Rocket
Bar Hoppers Celebrate End of Prohibition
Slideshow: 15 Mexican Drug Cartel Dealers Arrested
Celebrity breakups of 2013