It’s tax-filing time, so there’s much talk about that old adage, “There’s nothing certain except death and taxes.” But some say this adage isn’t true for everyone – that many people actually pay no taxes. N.C. State University economist Mike Walden takes a look at what the numbers show.
“Well, the number that I’ve heard … is that someone will say, ‘Yes, about half the people don’t pay any taxes.’ Here’s the truth. Forty-six percent of households do not pay any federal income taxes … . That’s the key here. The vast majority of people, though, do pay some kind of tax, whether it be a federal payroll tax, a state sales tax or a property tax in the local community.
“Now, if you look at the federal level, the two largest taxes are clearly the federal income tax and the federal payroll tax. Only 20 percent of households don’t pay either tax, and of these 20 percent, actually a majority of people are elderly.
“One other statistic: … If you look at households that make more than $20,000 a year, only 2 percent of those households pay no federal income tax.
“So, again, I think this is a real good example that you really have to look at the statistics. You have to know exactly what you are measuring, and you have to put these two measures together to get an accurate statement.”
Category: Economic Perspective