Who are the 47%?
That 47% number applies only to federal income taxes, and does not include payroll taxes -- used to fund Social Security and Medicare -- or any state and local taxes. About 18% pay neither a federal income tax nor payroll taxes. But 45 states have a sales tax, so it's nearly impossible for even low-income Americans to avoid paying at least some taxes.
Who are the 47%? The Tax Policy Center's Donald Marron said they fall into three main groups:
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 -- which means they must have some source of earned income.
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 -- even though most of them paid into the system through decades of paying taxes.
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.
But not all non-taxpayers fit into those categories. Even the ultra-wealthy can avoid paying taxes -- for example, if their income comes from tax-exempt bonds. Tax Policy Center data show that perhaps 24,000 of the top 1% of earners pay no federal income taxes.
"There are certainly people all through the income distributions who don't pay taxes," Marron said. He said the 47% figure has risen because of high unemployment, and will fall again during the recovery.
