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Fewer Households Paying No Federal Income Tax

gop presidential candidate mitt romney
Charles Dharapak/APFormer Republican presidential candidate and Massachusetts Gov. Mitt Romney.
By Allison Linn

That "47 percent" quote that helped sink Mitt Romney's presidential hopes? Better make that 43 percent now.

The share of households who aren't paying any federal income tax has fallen, and a new analysis from the Tax Policy Center predicts that it will continue to shrink in years to come.

That's partly because a slew of temporary tax cuts enacted during the Great Recession have started to expire. And it's partly because an improving economy means people's incomes should slowly start to increase, adding to their income tax bill.

By 2024, the tax policy think tank projects that only about one-third of households won't be paying any federal income taxes. The improvements might take a while because the economy has been adding new jobs at a painfully slow pace, and many workers aren't yet seeing much bigger paychecks.


Romney made "the 47 percent" famous during his 2012 Republican presidential campaign, after he was secretly recorded at a closed-door fundraiser saying that 47 percent of the population is dependent on government, believes the government has a responsibility to care for them "and will vote for this president no matter what."

"These are people who pay no income tax. Forty-seven percent of Americans pay no income tax," Romney said in the secretly recorded video, which was obtained first by Mother Jones and later by NBC News.

Romney was widely believed to have been referencing an earlier analysis released by the Tax Policy Center, which estimated that 47 percent of households paid no federal income taxes in 2009.

Roberton Williams, a senior fellow with the Tax Policy Center, notes that households that pay no federal income tax are very likely to still be paying other taxes. Those include payroll taxes for Medicare and Social Security, sales taxes and other state and local taxes.

"These people are taxpayers. That's an important point to make, I think," Williams said.

So who makes up the 43 percent?

Williams' analysis found that about 29 percent of all households include people who are working, and subject to payroll taxes, but don't have a federal income tax bill. That could be because of deductions or other tax breaks.

Another approximately 10 percent are elderly, and they likely aren't paying federal income taxes because they don't have much income beyond Social Security. A smaller portion -- about 3 percent -- are making less than $20,000 a year and therefore aren't subject to federal income tax because they are too poor.

That leaves about 1 percent of taxpayers who have other special circumstances, such as they are already paying foreign taxes.

Those who pay no federal income taxes aren't all low wage earners. Thousands of people who have income of more than $200,000 a year have been able to zero out their federal income tax bill, according to data from the Internal Revenue Service.

Williams also noted that many people who are part of the 43 percent may not even know it, since most people don't do their own taxes and those that do can easily get lost in the complexities of our famously dizzying tax code.

"I don't really know whether people are aware of it or not," he said.


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rrpatreilly

Can anyone explain to me how we have a record high number of Americans on food stamps, a continuos rise to the number of Americans living in poverty every year since obama took office, the same number of unemployed not even counting the 90 million who have used up their unemployment benefits but stopped looking for non existant jobs and are not counted, has lowered the number of non tax payers. Please anyone help me with this. Then go ahead and add and few million when the 11-20 million illegals get their citizenship. Don't forget to add Puerto Rico as our largest welfare state when they get statehood. When the illegals get their citizenship, the democrats will do to the Hispanics what they did to the Black race in America. They replaced the father in too many Black families with a welfare check. You don't have to be a mathematician to see this study is flawed beyond belief.

September 11 2013 at 5:23 AM Report abuse rate up rate down Reply
2 replies to rrpatreilly's comment
Christopher

Of course the percent NOT paying federal taxes went from 47 percent to 43 percent because 4 more percent went on welfare and do not pay federal taxes

September 11 2013 at 6:28 AM Report abuse rate up rate down Reply
s48man

I got a respone tell these jakeleg CEOS that rake in millions a year to give the working class a fair wage then you wont have as many on foodstamps seams as everybody crys about so many on foodstampos but nobody wants to address the wages factors to go with it i made as much in 1970 as some people do now thatys pathetic.

September 11 2013 at 7:55 AM Report abuse rate up rate down Reply
nyhuguenot

Sure they pay some taxes. Even Section Eight living, Food Stamp receiving Medicaid folks have to pay sales taxes on the new gig flat screen Plasma TV and the latest iphone.

September 11 2013 at 5:23 AM Report abuse rate up rate down Reply
brennemanbelkin

Simple answer.
Do away with "Motor-voter" laws and replace them with W2-voter laws.
The tax code would be simplified within four years.

September 11 2013 at 1:38 AM Report abuse rate up rate down Reply
robertbroders

okay, i did not check my submittal before i entered it. sorry about that.

September 11 2013 at 12:33 AM Report abuse rate up rate down Reply
robertbroders

i am sure every kid that mows lawns, rakes leaves, cleans gutters, etc. claims his income and the people folks hire to do odd jobs around their house with a cash for work or barter this for that avoiding sales and other taxes file. how about your local drug dealers, prostitutes, robbers that do not claim money by ill gotten means nor do the jerks that sell "stuff on the street" and how about the tips for servers at resturants and bars. what about the folks at sporting events that sell "hot dogs, hats, pennants, souveniers, hamburgers, cokes, etc." are they invisible. this is jjust the tip of the iceberg. mitt might have been right. please take all this in. how about valet parking. think about the gratis you pay. 20% on a meal at the resturant. please think about it but still tip out and hire the kids. remember the feds caught al capone on tea evaision charges not murder. respectfully submitted. r.g.b.

September 11 2013 at 12:29 AM Report abuse -1 rate up rate down Reply
1 reply to robertbroders's comment
chauncy

what are you talking about...thi s isnt about kids ...and since when is a person who can only make a living by "selliing stuff on the street" a jerk just because thats how me makes a living? whats wrong with workling for tips?

youre the jerk.

and This isnt even what Romney was talking about ....and yes Romney was right...but the reason it was a problem for him wasnt that hewas wrong...the problem was that he was right.. Obama made sure he had a lot of people on the federal tit so they would vote for him for fear their little gravy train (at taxpayers expense) would dry up if they didnt vote for him..

September 11 2013 at 4:10 AM Report abuse +1 rate up rate down Reply
ga7smi

meaningless

September 10 2013 at 11:48 PM Report abuse +1 rate up rate down Reply
gopisstupid2

We republicans love fox news that is where the truth is twisted and the facts are flawed.

September 10 2013 at 10:57 PM Report abuse rate up rate down Reply
betty_brock

We liberals love the spin even though it makes us dizzy.

September 10 2013 at 8:44 PM Report abuse -1 rate up rate down Reply
betty_brock

aly, if you are happy you voted for Obama, you are very STUPID.

September 10 2013 at 8:43 PM Report abuse rate up rate down Reply
John Baldwin

Libbaggers are the most reprehensible re jects!

September 10 2013 at 8:21 PM Report abuse +3 rate up rate down Reply