Americans Who Say They Pay Taxes Are Probably Lying
Even in normal times, 45% of U.S. households pay nothing to the federal government. It may be time to institute a minimum rate.
Be a patriot and pay your taxes.
Photographer: Joe Raedle/Getty Images
The Urban-Brookings Tax Policy Center recently released a report saying that 61% of U.S. households had paid no federal income tax in 2020, up from 44% in 2019, as the pandemic led to high unemployment and loss of income. Although the number will likely revert to the mid-40% range over time, now is probably a good time to have a discussion about what the right percentage of people paying taxes should be.
But first, it’s always good to point out that while about half of Americans don’t pay income taxes, almost everyone who is employed pays payroll taxes of some sort in the form of the 6.2% that is withheld from the first $142,800 of income. It’s important to draw the distinction between income taxes and payroll taxes. Philosophically speaking, payroll taxes are intended to fund one’s own social security. Income taxes are intended to fund government spending, which has been increasing every year. The burden of funding the government falls on a smaller number of taxpayers. The top 20% of taxpayers paid 78% of federal income taxes in 2020, up from 68% in 2019, according to the Tax Policy Center.