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).

>> 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-...

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.

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.

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.

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?

> 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.

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...

Capital gains are double taxation though so it makes sense that they are lower because of that fact.

Taxing earned income is double taxation because corporations are taxed. Corporate tax is double taxation because sales are taxed. Sales tax is double taxation because income is taxed.

> They avoid forms of income, like wages, that are taxed at a high rate, 37%, and instead make most of their money via capital gains and dividends from investments, most of which is taxed at 20%

> Large charitable donations reduce taxable income.

So they reduce income by having investments and donating money. Sounds pretty nefarious.

> But now add payroll taxes. The worker paid a bit more than $3,400 directly over the course of the year; in addition, the worker’s employer paid an equivalent amount as their share of the worker’s Social Security and Medicare taxes. Government agencies and most economists typically count both contributions — a total of nearly $6,900 in this instance — as a tax that is effectively borne by workers since it’s part of the cost of paying their wages. The logic is that employers consider those costs when hiring and would hire fewer people or pay them less because of the tax burden.

> All in, our worker paid $10,700 in taxes. Taken as a percentage of the worker’s full compensation (including a typical health plan), this comes out to a rate of 19%.

Riiight.. if you include money which they aren't actually paying, then they are paying more.

Part of the point is they don't have to do anything nefarious specifically. Taxing earned income more than investments is a choice. Billionaires aren't especially charitable proportionally as far as I know. It isn't self evident giving to favorite causes should substitute for paying taxes. And you left out the other deductions and credits.

Splitting payroll taxes is just sleight of hand. Changing who pays nominally doesn't change the fact an employer budgets a specific amount for payroll, the government gets a specific portion, and the employee gets a certain portion. The equivalence isn't even controversial in economics. And the article said full compensation including a typical health plan. So the calculation included money they aren't actually being paid too.

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.

>> 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-...

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/

Well, at least in New York City, there's a city tax and that is progressive too. There are property taxes, and they are progressive as well. Property sales taxes are also progressive. Not sure how those ITEP guys did their analysis, but for NYC at least, it is way off. There's no way that the top 1% of the people in NYC pay only 7.4% in (non-federal) income tax. You could say that their analysis is for the state as a whole, but it's virtually guaranteed that the vast majority of the top 1% earners live in NYC.

I wonder if you are saying the top 1% as far as making income, or if you mean the top 1% making money - like income vs capital gains.

Not sure if there is an official nomenclature for such, but I often wonder as I get into threads / discussions like these if people are taking into consideration these things or not - are they lumping them together, or is it a different thing.

If I was totally guessing, I would think the top 3% who sleep in NY probably pay no more than a poor school teacher - but if we were talking about the top 1% of people who actually get a paycheck with taxes taken out - then sure - but I think that ignores the bigger money that is moved around in other ways aside from a paycheck / w2s.

This is something that I am not sure if people in other countries would be taking into consideration as well, no idea if they tax the same / don't tax the same.

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.

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

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

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

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.

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.

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.

>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.

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.

> 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’

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.

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.