Nearly half of all taxpayers owed no federal income tax this year, according to new distribution analysis from the Tax Policy Center. Does that make you burn? Then have at this: 7,000 millionaires didn't owe any individual income taxes either. Seven thousand.
WHY DOES HALF THE COUNTRY PAY NO FEDERAL INCOME TAXES?
Remember, even families who owe no federal income taxes still pay tax to their local government, their state, the Social Security fund, and Medicare. Still, 76 million tax units owe no federal income tax. For the purposes of this article, let's call them the NOFITs (for No Federal Income Tax). Who are these NOFITs?
The poor, mostly. Consider households earning less than $30,000 a year. They make up 45% of all taxpayers, but fully 80% of NOFITs.
Here's what that statistic looks like, in two pie charts. The chart on the left shows all tax units.* The chart on the right shows the NOFITs. (Numbers refer to cash income, in thousands of dollars.)
Two takeaway stats. First, 79% of the non-income-tax-paying crowd, the NOFITs, makes less than $30,000. Second, 99% of the NOFITs make less than $75,000. Still, that leaves one percent. Nearly 500,000 tax units earn more than a $100,000 and pay no taxes. How is that possible?