Gary Charpentier wrote:

As a little aside, if you are a single male (or childless female) in the USA most likely you pay income tax. If you aren't until you make well above the poverty line most likely you don't pay income tax. If you look at the number of single head of household plus the number of married people in the USA then the 47% zero total income tax figure begins to make sense. The Government wants you married and making babies.

This is not news to me.
However, MajorKong stated here that "Oh, and that family of 4 with the $30,000 / year income isn't officially 'poor'. Federal HHS poverty level for that family of 4 is $22,050." I recently heard that the median salary in the U.S. is about $42000-$43000 per year. If so, then, of course, approximately 50% make less than this. But, what percentage, single or married or married with children fall below the poverty line?

Gary Charpentier wrote:

My answer to you to work it out is because I am confidant if you do you will see that the zero that is mentioned in the article is not the refund line, but the total tax line, the one above the credits on the tax form. I also don't think my telling you it is so will be as effective in pulling the wool from your eyes as if you figure it out yourself.

The phrase "pull the wool from your/his/her/our/their eyes" implies deception, perhaps including self-deception. I believe your use of the phrase in this instance is inappropriate, but I am willing to give you a (thin) thread of benefit of the doubt because you don't know me.
Next, I will tell you a far better way to get an inkling as to whether your intepretation of the article is correct: in http://setiathome.berkeley.edu/forum_thread.php?id=62490&nowrap=true#1060400, I stated:
Sarge wrote:

I did bring up this thread to a friend who helps me with my grading. He did tell me he makes so little that he has had very very little withheld over this entire year. But it is not nothing. And while this pushes me closer to being able to believe Gary, I still do not see this made clear in the article.

Gary Charpentier wrote:

I am somewhat curious why you believe it can not be the total tax line and must be the refund line? Is it because you have been led to believe most people in the USA pay Federal Income Tax and you simply can't believe it to not be so?

Gee, who could be leading me to believe this? Oh, that's right, no one, because this is not a typical topic of conversation among my family, friends, or news I pay attention to. Remember, (thin) thread of benefit of the doubt.
Now, what I have argued all along is the lack of clarity in the article. If I haven't made it clear to you the instances of lack of clarity, see below.
When working part-time jobs, for a pittance, as an undergrad, I don't recall having a total tax owed of $0 or even close to that. But, that could either be me not remembering well enough (a rarity) or there have been changes in the tax code (more likely and not surprising). Add to this what I already said about my grader. a non-traditional age student, one year older than me, married but no kids, and mostly pulling in a pittance from tutoring.

As I have said, people who have responded have, or appear to have, vacillated on to which thing this total of 0 refers. No, I am not referring to anyone who has said all along that it is not the total tax is 0. Let us examine again the first few paragraphs of the article.

keith wrote:

Jeanne Sahadi wrote:

47% will pay no federal income tax

Nope, not clear. How hard would it be, in the article, to say either:
(1) The total tax paid by withholding from paychecks, is 0, versus
(2) After credits, amount already paid in, and determining whether there is a refund or an additional amount to be paid, yadda yadda yadda.
Nope, not clear in the title. But, hey, it's a title and lengthy titles tend to be reserved for theses and dissertations. :) Let's examine further down.

keith wrote:

Jeanne Sahadi wrote:

In 2009, roughly 47% of households, or 71 million, will not owe any federal income tax, according to estimates by the nonpartisan Tax Policy Center.

Nope, not clear here, either. A clear statement in support of your interpretation could read as "In 2009, roughly 47% of households, or 71 million, will not have any federal income tax withheld from their paychecks and will further find they do not owe anything when completing their 1040s ... ." Just a few more words. No need for interpretation. My suggesting this does not indicate what I believe about which interpretation is true, it simply indicates I find the article lacking in clarity.

keith wrote:

Jeanne Sahadi wrote:

The ranks of those whose major federal tax burdens net out at zero -- or less -- is on the rise.

Focus on the phrases "federal tax burdens" and "net out at zero."
It should come as no surprise that, here too, the lack of clarity of Jeanne Sahadi's writing has left things open to interpretation.
Dealing with the second phrase first, "net" is probably interpreted by most people as "amount after all is said and done."
"Federal tax burden": nope, not clear that this refers to a total amount of 0 withheld from paychecks during the year and also not owing after that. I'm sure most or all regard being taxed as a burden. And we can argue about the constitutionality of being taxed, or the particulars of the current tax code, or how our tax money is spent. But one can say, "Phew, I didn't owe" or "Phew, I got a refund," yet have paid their federal taxes through their paycheck withholdings and after a refund still think "Well, I did my part, paying my federal tax burden. Thank goodness I overpaid and got some back!"

Gary Charpentier wrote:

I will point out two others in the thread, both tax preparation persons, back up my reading of the article.

Then I think I can take this as indirect support of my claim in this post: the article lacked clarity that could have been easily fixed.
Can we at least agree on this?

I'd agree that the article is kinda deceptive in its choice of words. As you stated it would have taken just a few more words to clarify statements instead of leaving the individual to make heads or tails of the article. This is simply bad journalism. If one intends to inform then ones articles should be clear and concise. This one is neither.

---

In a rich man's house there is no place to spit but his face.
Diogenes Of Sinope

Focus on the phrases "federal tax burdens" and "net out at zero."
It should come as no surprise that, here too, the lack of clarity of Jeanne Sahadi's writing has left things open to interpretation.
Can we at least agree on this?

Not open to interpretation. Very explicit.

I think the issue is that it wasn't dumbed down enough for those that don't understand the precise meanings of the tax and accounting lingo that was used. Then again that came from the Tax Policy people and not the reporter.

Dealing with the second phrase first, "net" is probably interpreted by most people as "amount after all is said and done."

Why yes, the amount you would find on a profit and loss statement, not the amount you would find on the A/R or A/P or Statement of Account.

The P&L number is the line on the 1040 that says: "This is your total tax"
The statement of account number is the line how much you owe or how much is your refund.

Hope this sheds some light on how I think it should be read.


As to you remembering owing tax back years ago, there have been many changes to the tax code to make it far more progressive that it was, more progressive than most any other country.

---

Ok, Sarge. Once again.

I think that you have an incomplete understanding of the Federal Income Tax process, and this leads to your finding ambiguity in the article where none really exists.

Nope, not clear. How hard would it be, in the article, to say either:
(1) The total tax paid by withholding from paychecks, is 0, versus
(2) After credits, amount already paid in, and determining whether there is a refund or an additional amount to be paid, yadda yadda yadda.

You seem to perceive only two possibilities (please correct me if I am wrong):

'pay no federal income tax' equates to either:

1. No federal income tax was withheld from their paycheck... Or

2. Money was withheld, but after the return, no additional amount was owed.


This interpretation of yours seems to miss the entire point, and demonstrates, I think, a fundamental misunderstanding of the process.

When money is withheld from your paycheck for the purposes of 'federal income tax', that money is not 'paid tax' at that time. It is only an interest-free (sadly) loan you are giving the Government, which then adds this withholding as a credit to your account with them.

They withhold this money, with an amount calculated according to a formula they have devised, to spread out your tax burden over the entire year, and not concentrate all of it on 'tax day', which is usually on or around April 15th -- the usual deadline for most for sending in their federal income tax return.

Ok, here is where I think that you are missing the point.

You have not officially 'paid your federal income tax' until you have sent in your return and it has been processed. Why? They cannot know for certain how much you owed until your return has been sent in and processed.

If, according to your return (for one reason or another), you owed no federal income tax at all, and you get a complete refund of everything that might have been withheld, then you have PAID NO FEDERAL INCOME TAX that year.

I recently heard that the median salary in the U.S. is about $42000-$43000 per year. If so, then, of course, approximately 50% make less than this. But, what percentage, single or married or married with children fall below the poverty line?

Due to the standard deduction, personal exemptions, and the ever-increasing number of tax credits available, it is currently possible to make a bit over $40,000 in a year and still owe $0 in federal income tax that year. You no longer have to be anywhere near the poverty line to owe $0.

The 47% mentioned in the article somewhat matches this when compared to, as you said, a median of $42,000-$43,000.

Many complain about the rich having lots of income tax loopholes. But then, large numbers in the bottom 50% have a nice loophole of their own in the form of all these tax credits.

And I haven't yet even gotten to the bonus 'refund' that many at the poorer end of the bottom 50% get. It seems that lots of these tax credits are 'refundable'. It is highly likely, even expected, that most at or even somewhat above the poverty level will get, over and above the refund of everything withheld, several thousand dollars EXTRA on their 'refunds', due to these refundable tax credits (think, for instance, EITC) as a kind of welfare transfer payment.

This slightly changes the situation. People nearer the poverty level (and, of course, below) end up actually owing a NEGATIVE amount of Federal Income Tax. I know someone that, while they were a bit above the poverty level for the 2008 and 2009 tax years, instead of receiving the 'normal' refund of the several hundred dollars that was actually withheld, received a 'refund' of a bit over $7500.00 each year due to the EITC and friends. And at that income level, their situation is rather typical. Why else do you think you see so many people at H R Block (and its competition) lining up for 'tax refund loans', though if they were smart, filed rather early, and choose 'direct deposit', they could get their 'refund' in 2 or 3 weeks and not pay the rather high interest rate these loans have.

The initial premise of article in question (almost half pay no income tax) is totally believable. Now, I cannot be 100% sure that the 47% figure is correct. But it is certainly very close (no more than a couple of percent off), in my opinion.

Gary Charpentier wrote:

As a little aside, if you are a single male (or childless female) in the USA most likely you pay income tax. If you aren't until you make well above the poverty line most likely you don't pay income tax. If you look at the number of single head of household plus the number of married people in the USA then the 47% zero total income tax figure begins to make sense. The Government wants you married and making babies.

This is not news to me.
However, MajorKong stated here that "Oh, and that family of 4 with the $30,000 / year income isn't officially 'poor'. Federal HHS poverty level for that family of 4 is $22,050." I recently heard that the median salary in the U.S. is about $42000-$43000 per year. If so, then, of course, approximately 50% make less than this. But, what percentage, single or married or married with children fall below the poverty line?

Gary Charpentier wrote:

My answer to you to work it out is because I am confidant if you do you will see that the zero that is mentioned in the article is not the refund line, but the total tax line, the one above the credits on the tax form. I also don't think my telling you it is so will be as effective in pulling the wool from your eyes as if you figure it out yourself.

The phrase "pull the wool from your/his/her/our/their eyes" implies deception, perhaps including self-deception. I believe your use of the phrase in this instance is inappropriate, but I am willing to give you a (thin) thread of benefit of the doubt because you don't know me.
Next, I will tell you a far better way to get an inkling as to whether your intepretation of the article is correct: in http://setiathome.berkeley.edu/forum_thread.php?id=62490&nowrap=true#1060400, I stated:
Sarge wrote:

I did bring up this thread to a friend who helps me with my grading. He did tell me he makes so little that he has had very very little withheld over this entire year. But it is not nothing. And while this pushes me closer to being able to believe Gary, I still do not see this made clear in the article.

Gary Charpentier wrote:

I am somewhat curious why you believe it can not be the total tax line and must be the refund line? Is it because you have been led to believe most people in the USA pay Federal Income Tax and you simply can't believe it to not be so?

Gee, who could be leading me to believe this? Oh, that's right, no one, because this is not a typical topic of conversation among my family, friends, or news I pay attention to. Remember, (thin) thread of benefit of the doubt.
Now, what I have argued all along is the lack of clarity in the article. If I haven't made it clear to you the instances of lack of clarity, see below.
When working part-time jobs, for a pittance, as an undergrad, I don't recall having a total tax owed of $0 or even close to that. But, that could either be me not remembering well enough (a rarity) or there have been changes in the tax code (more likely and not surprising). Add to this what I already said about my grader. a non-traditional age student, one year older than me, married but no kids, and mostly pulling in a pittance from tutoring.

As I have said, people who have responded have, or appear to have, vacillated on to which thing this total of 0 refers. No, I am not referring to anyone who has said all along that it is not the total tax is 0. Let us examine again the first few paragraphs of the article.

keith wrote:

Jeanne Sahadi wrote:

47% will pay no federal income tax

Nope, not clear. How hard would it be, in the article, to say either:
(1) The total tax paid by withholding from paychecks, is 0, versus
(2) After credits, amount already paid in, and determining whether there is a refund or an additional amount to be paid, yadda yadda yadda.
Nope, not clear in the title. But, hey, it's a title and lengthy titles tend to be reserved for theses and dissertations. :) Let's examine further down.

keith wrote:

Jeanne Sahadi wrote:

In 2009, roughly 47% of households, or 71 million, will not owe any federal income tax, according to estimates by the nonpartisan Tax Policy Center.

Nope, not clear here, either. A clear statement in support of your interpretation could read as "In 2009, roughly 47% of households, or 71 million, will not have any federal income tax withheld from their paychecks and will further find they do not owe anything when completing their 1040s ... ." Just a few more words. No need for interpretation. My suggesting this does not indicate what I believe about which interpretation is true, it simply indicates I find the article lacking in clarity.

keith wrote:

Jeanne Sahadi wrote:

The ranks of those whose major federal tax burdens net out at zero -- or less -- is on the rise.

Focus on the phrases "federal tax burdens" and "net out at zero."
It should come as no surprise that, here too, the lack of clarity of Jeanne Sahadi's writing has left things open to interpretation.
Dealing with the second phrase first, "net" is probably interpreted by most people as "amount after all is said and done."
"Federal tax burden": nope, not clear that this refers to a total amount of 0 withheld from paychecks during the year and also not owing after that. I'm sure most or all regard being taxed as a burden. And we can argue about the constitutionality of being taxed, or the particulars of the current tax code, or how our tax money is spent. But one can say, "Phew, I didn't owe" or "Phew, I got a refund," yet have paid their federal taxes through their paycheck withholdings and after a refund still think "Well, I did my part, paying my federal tax burden. Thank goodness I overpaid and got some back!"

Gary Charpentier wrote:

I will point out two others in the thread, both tax preparation persons, back up my reading of the article.

Then I think I can take this as indirect support of my claim in this post: the article lacked clarity that could have been easily fixed.
Can we at least agree on this?

The article doesn't need to be rewritten. Crystal clear to me.

you still haven't explained how 24% = 47% they make it quite clear that this is the case. So? does 47% = 24% Since this article is so crystal clear please enlighten us.

---

In a rich man's house there is no place to spit but his face.
Diogenes Of Sinope

you still haven't explained how 24% = 47% they make it quite clear that this is the case. So? does 47% = 24% Since this article is so crystal clear please enlighten us.

47% pay no federal income tax PERIOD.
24% get a Robin Hood welfare subsidy.

Got it?

---

no I'm still confused.

In 2009, roughly 47% of households, or 71 million, will not owe any federal income tax, according to estimates by the nonpartisan Tax Policy Center.

When considering federal income taxes in combination with payroll taxes, the percent of households with a net liability of zero or less is estimated to be 24% this year, according to the Tax Policy Center's estimates

I'm not sure but these numbers do not add up. Now if I read it the way I want it seems to be saying that when you include payroll taxes the number (47%) goes down to 24%. this really isn't that extreme when you consider the number of people within 150% of the poverty line which of course is where tax credits and lesser tax burdens occur.. Yep its a tragedy

---

In a rich man's house there is no place to spit but his face.
Diogenes Of Sinope

no I'm still confused.

In 2009, roughly 47% of households, or 71 million, will not owe any federal income tax, according to estimates by the nonpartisan Tax Policy Center.

When considering federal income taxes in combination with payroll taxes, the percent of households with a net liability of zero or less is estimated to be 24% this year, according to the Tax Policy Center's estimates

I'm not sure but these numbers do not add up. Now if I read it the way I want it seems to be saying that when you include payroll taxes the number (47%) goes down to 24%. this really isn't that extreme when you consider the number of people within 150% of the poverty line which of course is where tax credits and lesser tax burdens occur.. Yep its a tragedy

It is not that difficult, skildude.

Take all the households in the USA. Sort them by income.

47% of these households pay no federal income tax. While they might have some withheld, they do not have enough income to owe any accounting for the various deductions, exemptions, and credits. They get everything they had withheld returned to them as a refund (sadly, though, without interest... but that is another debate altogether).

As you continue to go down in income from the 47% level, refundable tax credits return more and more money (over and above what was withheld for income tax) to these households, until at the 24% level, the amount of the 'additional' refund exceeds what these households paid in FICA (Social Security / Medicare) taxes as well. When considering the combination of Federal Income Tax and FICA withholding, these households have a zero or negative tax burden.

One of the points the article raises is that these people, especially those below the 24% level where they get back more money than they paid in FICA/FIT withholdings, have no incentive to hold down federal taxes & spending. They are on a Federal Gravy Train, and will remain so (it seems) until the rest of us are so bankrupt the economy collapses. The article states that this is not sound fiscal policy. I agree.

Let everyone have some skin in the game, if only just a small amount. Then there might be enough political will to have some restraint in growth of Federal Spending and Taxation.

definitely a tragedy

---

In a rich man's house there is no place to spit but his face.
Diogenes Of Sinope

ok so 23% owe exactly $0.00 That's a crapload of people that can deduct everything they paid in but can't receive a credit.

---

In a rich man's house there is no place to spit but his face.
Diogenes Of Sinope

ok so 23% owe exactly $0.00 That's a crapload of people that can deduct everything they paid in but can't receive a credit.

Carefully read what I posted, and that will clear up your misunderstanding.

At the level of income corresponding to the 47% mark, they owe exactly $0.00 thus getting all that was withheld back. As one continues to descend the income ladder, one begins to owe NEGATIVE amounts of federal income tax, thus getting amounts back in excess of the withheld amount due to the various tax credits. Eventually (at the 24% mark), the amount of the refund in excess of what was withheld exceeds the amount of the FICA taxes they paid, so effectively they get those back too, and more besides.

A lot of people need to improve their reading comprehension.

A lot of people need to improve their reading comprehension.

That or actually learn a bit about how the Federal Income Tax system actually works. It does help if you file your own return and are forced to read and understand the instructions.

---

ok so 23% owe exactly $0.00 That's a crapload of people that can deduct everything they paid in but can't receive a credit.

Uh, that is 23% minus one individual get welfare money for sending in paperwork and keeping IRS workers employed.

---

It involves numbers, percentages, ratios, equations, FINANCIAL MATH, etc. Liberals don't deal well with those.

They think with their hearts, not with their heads.

I just realized the article is far short on the real percentages. They should be much higher. Here is why: The article completely ignores the fact that most people will live long enough to draw Social Security and Medicare benefits. Those benefit draws have not been included in the single year figure the article is based upon. As I recall the majority of citizens will receive more in SSA / Medicare benefits than they put in. One of the reasons the trust fund faces bankruptcy.

I wouldn't be surprised to find that over their lifetimes on average half of Americans take more from Uncle Sam than they put in.

How did Kennedy put it; "And so, my fellow Americans: ask not what your country can do for you - ask what you can do for your country."

---

theres no S in skildude I understand that.

---

In a rich man's house there is no place to spit but his face.
Diogenes Of Sinope

Gary Charpentier wrote:

Not open to interpretation. Very explicit.

I think the issue is that it wasn't dumbed down enough for those that don't understand the precise meanings of the tax and accounting lingo that was used. Then again that came from the Tax Policy people and not the reporter.

These two paragraphs are an example of what I referred to as waffling.

And then, "dumbing down"? Do you really want to go there? I'm not going to take the time to combat that, except to say this:
This was reported by Jeanne Sahadi of CNN. The reporter does have a responsibility to take the information provided/obtained and express that in a concise yet clear way. Doing a little translation for intelligent people who do not specialize in the areas contained within finance is not dumbing down.

KWSN - MajorKong wrote:

Ok, Sarge. Once again.You seem to perceive only two possibilities (please correct me if I am wrong):

It doesn't matter how many possibilities there are.

KWSN - MajorKong wrote:

When money is withheld from your paycheck for the purposes of 'federal income tax', that money is not 'paid tax' at that time. It is only an interest-free (sadly) loan you are giving the Government, which then adds this withholding as a credit to your account with them.

This is not news to me.

KWSN - MajorKong wrote:

You have not officially 'paid your federal income tax' until you have sent in your return and it has been processed. Why? They cannot know for certain how much you owed until your return has been sent in and processed.

Again, this is not news to me, and in my case (shared by others), it is just semantics. Because, in my case and the case of others, it is a matter of switching calling it, "you provided us (the federal government) a (interest free) loan" to "you paid us your taxes" but you overpaid or underpaid or balanced out at 0. For us, semantics, semantics, semantics.

KWSN - MajorKong wrote:

If, according to your return (for one reason or another), you owed no federal income tax at all, and you get a complete refund of everything that might have been withheld, then you have PAID NO FEDERAL INCOME TAX that year.

Yes, that's been the question, and I think, despite the wording of the article, it's been cleared up that it is what the article claimed. I don't think you'll find at any point that I've been debating whether the 47% is correct or not.

[quote=KWSN - MajorKong]And at that income level, their situation is rather typical. Why else do you think you see so many people at H R Block (and its competition) lining up for 'tax refund loans', though if they were smart, filed rather early, and choose 'direct deposit', they could get their 'refund' in 2 or 3 weeks and not pay the rather high interest rate these loans have.

I do not look at what's going on at H & R Block or any of their competitors, because I generally do not need their services. I did call them last year with a question and it turned out they could not help me, hence I did not make the 1.5-2 mile trip over to their office. That's the only contact I've ever had with H & R Block.

As for recent comments about "reading comprehension," "mathematical ability" and "liberals" ... . Wow. More sweeping generalizations.

So Hu Jintao, our primary lender is blowing into town again! I wonder if our fearless leader will get his ears pinned back again like he did a few months ago at the G-20 in Seoul?

http://www.hulu.com/watch/110317/saturday-night-live-china-cold-open