Right, but the misleading "Don't pay Federal Income Taxes" trope purposefully ignores that they do pay Federal Payroll Taxes -- which per your chart is another 36% of government revenue.

Digging into the report, 43.3% of people didn't pay either in 2020 [1], if that helps you out at all.

[1] - https://www.taxpolicycenter.org/model-estimates/tax-units-ze...

> Why would they be different?

It doesn't make a lot of sense, but the fact of the matter is that the phrase "income tax" as commonly used does not include payroll taxes. "Income tax" refers only to the tax on "taxable income", i.e. your net income after deductions and credits. Payroll tax, by way of contrast, is taken from the very first dollar you make, so the only way you can avoid paying that is if you are unemployed. Saying that "61% of Americans do not contribute to the pool of money that is spent by the federal government as a result of their income" is tantamount to saying that 61% of Americans are unemployed, which is plainly not the case. (BTW, "income" in the sense of "income tax" does include dividends and capital gains, which are not subject to payroll taxes. So it is possible to make millions while unemployed and pay no payroll taxes. That is actually not uncommon. In fact, it's the norm among retired people.)

For others, lisper is replying to the original version of the GP comment which stated that federal income and payroll taxes were one and the same for the 61% number.

Yep, I was 100% wrong, and felt I should bow out of the conversation as a result. I left in the research that made me discover how incorrect I was, to help guide others.

It is customary in cases like this not to delete the erroneous comment but rather to add an [UPDATE] tag at the end to add a correction. This keeps the original thread of the conversation intact. There is no shame in making mistakes. Everyone does it.

I don't agree for a number of reasons, but mostly that I don't think "custom" alone is a good reason to do literally anything.

But I respect your opinion, and I hope you are able to forgive me.

You should add an update to the 43% comment as well to say that percent is only true for 2020 and 2021. Every other year it is usually below 25%. Including going into the future with their simulation. I find a technically correct statistic that helps the same narrative as the incorrect/wrong stat is possibly even worse.

Like the sibling said. It should be an update or edit. Not a change of the comment entirely.

Hope you can make that change as there are a lot of comments that have replied to you.

Cheers for acknowledging you made a mistake. Like many others. That is sometimes hard for me to admit.

Edit: I just looked at this and other articles. They all say to be aware of how isolated 2020 and 2021 are due to the stimulus. I believe it is bad faith to put 43% as the number when for every other year, the number is usually below 25%.

EDIT: This to me is another indicator of the narrative pushing and stat specifying that muddies the waters.

—-

It would be quite helpful if the net worth/wealth of individuals who don’t pay either is given as well. When that 43% figure is pointed out. Generally people only think of lower economic class people. Not situations like the previous president not paying taxes for a number of years.

Otherwise all these stats still do not change my original point that they all muddy the waters and people assume the stats are only referring to lower income individuals or “leeches” who are of lower socioeconomic levels too.

There's also the early-pandemic dip. The stock gains aren't nearly so dramatic when you look at the bigger picture.

The report says that the % of people(tax units) who didn't pay either in 2020 was 20.5%.

The 43.3% was the % of tax units that had a net negative income and payroll taxes (thought I doubt this included the employer side of the tax which for economics purposes falls on the worker). But that was also the Covid year.

Most years it's 25%-22%, which doesn't seem high for the poor, the disabled, and the retired.

Could many of these people be retirees? It takes a lot of wealth to retire and then you don’t pay income tax.

Only 16.5% of the population is over 65 years old. And many retirees do pay income tax. So most of this number is not retirees.

I said “many” not “all.”

The question I have is how to have policies that don’t hurt that 16.5%. It seems unfair to go after the elderly and take away the money they have worked hard to save. They are already being hurt by inflation, which sits at about 5%.

once you combine that with 16 and under, you are getting most of it.

Note the jump from 2019 to 2020. 25% in 2019 to that 43% figure you note here.

That’s fairly important context. 43% is not a typical number, and as you can see in the report, it is expected to return to baseline quickly.

That's not what your link says. The final rows are "don't pay either" (20% of tax units). The one you quoted is from the 2020 data for "Zero or Negative Sum of Income and Payroll Taxes".

Your total tax liability can become zero, even post the 7-ish% Social Security and such, due to the EITC and so on. For example, if you make $20,000 / yr but have two children (made up numbers), you probably end up with a sum of zero.

What does a "sum of zero" mean, in "dollars paid to the US government overall"?

The $300-600/week/person benefit counts as part of that sum (plus the one off checks). So you could have Federal taxes of say $2000 and then benefits of $10000, resulting in a net transfer (sum of "zero" is probably not right, <= zero).

I do not understand your point. The parent is saying FICA/payroll taxes are 36%. That’s revenue for the federal government and some of it is spent by the federal govt.

So I do not understand your first sentence. Maybe you can clarify.

Original comment from parent:

> They do not pay Federal Payroll Taxes, because those are considered Federal Income Taxes. Why would they be different? Taxes come out of their paycheck, of which they get back from the government when their taxes are due.

> The point is that 61% of Americans do not contribute to the pool of money that is spent by the federal government as a result of their income (though they do pay as a result of sales and other taxes).

Payroll taxes are paid by the employer.

>Payroll taxes are paid by the employer.

Half of payroll taxes are paid by the employer. The other half are paid by the employee.

And if the employer wasn't paying that half, they might pay at least some portion of that to the employee. And employers don't pay any payroll tax for non-employees.

Sort of at the Federal level (though these tend to colloquially be understood/communicated as "income taxes" despite being de jure FICA/payroll).

This _isn't_ true at the state level, where payroll taxes may be paid by an employer and not the employee.

In the end it is a wash.

>This _isn't_ true at the state level, where payroll taxes may be paid by an employer and not the employee.

That's not true in my state.

>In the end it is a wash.

Not even close.

Show me a state that has combined (employer/employee) payroll taxes of 15.3%. What's that? No state comes anywhere close to that?

Not a wash by a long shot.

In your effort to create a false dichotomy you have ignored several factors and points.

15.3% is the FICA factor (assuming not above income cap), split evenly between employer and employee. Add on top how the state, municipalities, school districts extract their payroll/income taxes, which can be 100% on employee, 50% on employee, 0% on employee, or none of the above. In Texas, it is 100% on employer. In Ohio, the split mixes and matches with some of the entities charging the employer and employee. Ergo, it's not always a 50/50 split between employee and employer.

In the end, it is a wash whether applied to employer or employee. FICA extracts the same amount, and other entities will extract their amount. Reduction by the employee or employer via credits are typically not feasible or are strongly engineered against.

Thanks, and this is my last comment on this thread. Have a good day.

> they do pay Federal Payroll Taxes

The 36% on that chart is labeled "SOCIAL INSURANCE (PAYROLL) TAXES". Are you suggesting the employer pays these taxes?

Thank you.

Right and so what does saying this achieving? There is still so much nuance as to, in my opinion, make this fact practically useless.

There’s no breakdown of capital gains taxes. Or how much taxes are not captured because of loopholes or tax benefits that go to this segment or that segment of income level or wealth.

OTOH, I don’t know how many services come from local government that isn’t the federal government.

These are simplified examples/points. The point remains both the original stat and this one portray a skewed narrative.

I don’t think this changes anything for my original comment. One could say it even bolsters the case as it is another example of how misleading a quick stat can be.

But the thing is that if americans who don't pay taxes don't own stocks and americans who build most of the social system, the top 10% who pay all those taxes, also own stocks, it might compel someone to say... thanks, rather than "fuck you"... ?

I don't know, if you just redistribute ALL the wealth by murdering the 10% to the rest, what do you think will happen to the taxes ? What will happen to all that "the rich don't pay enough", when actually they paid everything, when it's time for YOU to pay ?

I think that's what all these people in the thread hint at.

I know that’s what people believe and hint at. That’s the point of the original statistic. To give this distorted unproven worldview.

Who do you think does most of the work across the country?

Stock owners aren’t actually doing much. They also aren’t paying high rates of taxes.

why wouldn’t one of these people think why is income tax different than capital gains tax to the extent it is.

Or why their limited money doesn’t allow them to earn money just for having money. While those top 10% can avg close to 10% a year on their saved money in the form of investments (before inflation, fees). Yet there’s no wealth tax or any other way to not make things seem illogical that the mere fact of having money begets more money.

Can these questions not be asked before either thanks or fuck you.

> the top 10% who pay all those taxes,

Do you have any sources around this info?

> There is still so much nuance as to, in my opinion, make this fact practically useless.

Agreed, and so is the title of the thread we are discussing.

> The wealthiest 10% of Americans own a record 89% of all U.S. stocks

Why is the title to the thread just as practically useless? It seems less useless to me. It is at least giving some semblance of the high levels of wealth inequality.

So 50% of the Federal government's income is taxes that every working American does pay.

There are also corporate taxes and estate taxes, and payroll taxes of which the employer must pay half.

corporate and payroll taxes are all paid by employees depending on elasticity, their income would be higher if the taxes didn't exist. True for estate tax.

I dont know anyone that got a substantial pay raise in 2017 when the corporate tax rate went from 35% to 21%. I also dont remember prices declining.

are you sure that corporate taxes are paid by the employee and lowering taxes results in higher pay and lower prices?

Wages are sticky because people generally don't like job hopping. Over time they absolutely lead to higher wages as firms compete for employees.

As far as corporate tax incidence, the literature is pretty clear that they reduce wages. They reduce return on capital too, some estimate that a $1 corporate tax costs capital 60 cents and labor 40 cents from what I've read. Some estimates are 50/50 though. https://www.aeaweb.org/articles?id=10.1257/aer.20130570

https://www.sciencedirect.com/science/article/abs/pii/S00142...

A scenario:

Daddy Warbucks learns that the government is raising corporate taxes. He goes and tells his workers the government has cut their pay. He has no choice. Business necessity.

Daddy Warbucks learns that the government has cut corporate taxes. He pockets the windfall.

There is some business logic behind this: if the windfall is temporary, he doesn't want to raise salaries. That would be difficult to undo if the tax rates go back up. And whether this is the logic that actually motivates his decision hardly matters. Who can know what is in his heart? Even he doesn't. This helps him sleep at night. When he harms others his hand has been forced. When he helps other it proves his essential goodness. Fundamental attribution error FTW!

The logic is that the unions are dead and workers have no bargaining power to demand a raise even with the tax cut.

Yeah, the personal income elasticity with respect to those taxes doesn’t seem appreciable.

"Money spent" != "income". The other 50% is deficit spending.

Look at the chart again. It's revenue, not spending.

True, but manyservices that Americans get from government comes from state and local government: schools, fire/police, etc. The feds dominate the national new coverage, but local government generally has a much larger affect on your day to day life.

I've heard this trope before, but it doesn't seem true to me. The federal government's day-to-day services include universities (through student loans and grant funding), travel (domestic and international), the quality of food we eat, healthcare regulation, and nearly everything to do with employment.

The local governments seem to focus mostly on K-12 schools, and police/fire; plus some one-off errands like the DMV and liquor laws.

The amount of federal taxes I pay is a life-changing amount if I were to get it back in a single check every year, whereas the state/city taxes of sales+property+stateincome is maybe a quarter as much.

100% of the USDs that the federal government spends originate from the federal government. Money doesn't grow on taxpayers.

In fact, it's the citizens responsibility to return the dollars via taxation... One way to interpret government debt is that money is a claim to the entire economy of the country and thus money does not create real wealth, it just makes real wealth liquid.