Tax Day 2012

Tuesday, April 17th, 2012 and is filed under Blog, Taxes

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Today is tax day 2012.  Coincidentally, it is also Tax Freedom Day this year, the first calender day that most Americans begin to work for themselves – that is those American who pay taxes.

Gallup published an interesting poll this week showing the public attitude towards the current tax system.  The results are fascinating: 47% think that their taxes are about right and 46% think their taxes are too high.  Guess what?  The bifurcation between the two groups tracks very closely with the percentage of Americans that have a positive federal income tax liability.  Remember that 47% pay no federal income taxes.  However, the amazing thing is that it was the low-income earners who were satisfied with their tax rates.  According to Gallup, those earning less than $30,000 more the most unhappy about their tax liability.

The problem is that they pay no federal income taxes!  And many of them receive enough refundable credits that it zeros out their payroll taxes with spare change!  This is what the insidious art of class warfare sows in the hearts of so many Americans.

Here are some other interesting tax facts in honor of Tax Day:

From the Tax Foundation

  • 143 million tax returns were filed with the IRS in 2010, some of which represent households and married couples.
  • Americans paid federal incomes taxes of $945 billion.
  • Only 85 million actually paid taxes out of the 143 million filers.  In other words, 58 million, or 41%, were non-payers.  96% of these non-payers made less than $50,000.
  • The IRS paid out $105 billion in refundable credits to filers who paid no income tax.
  • The effective tax rate for those making less than $50,000 was 3.5%, and their share of taxes paid was 6.7%.
  • The effective tax rate for those making more than $50,000 was 14.1%, and their share of taxes paid was 93.3%.
  • The effective tax rate for those making more than $250,000 was 23.4%, and their share of taxes paid was 45.7%.
  • 33% of tax filers itemized.
  • 25% of tax filers took the mortgage interest deduction, which reduced taxable income by $381 billion.
  • 27% of tax filers took the charitable donations deduction, which reduced taxable income by $158 billion.
  • 26 million filers took the refundable earned income tax credit, and they received $56 billion from the IRS despite having paid no income taxes.
  • 21 million filers took the refundable child credit, and they received $27 billion from the IRS despite having paid no income taxes.

The first Republican who successfully spearheads a flat tax system through Congress deserves the Medal of Honor.