10% of U.S. Households owe no net Federal taxes - NOT 47%

Conservatives have been going crazy over the fact that 47% of U.S. households owe no net Federal income tax. That statistic is correct. However, it is more like only 10% of U.S. households who owe no net Federal income and payroll taxes. The payroll taxes are flat taxes that fund Medicare and Social Security; in that sense, they are regressive in isolation (although as a whole the tax system is progressive, and could stand to be more progressive).

David Leonhardt debunks the 47% myth here in an editorial in the New York Times. This reckoning is before most state and local taxes. Conservatives think, and I agree, that everyone should pay taxes, even if it is just a nominal amount. It's a practice of citizenship, just like voting. However, The fact is that the vast majority of people do, in fact, owe net taxes. The U.S. has chosen to administer some tax credits through the tax system, like the Earned Income Tax Credit and, in the last year, the Making Work Pay tax credit as an economic stimulus measure.

Leonhardt's article is highly recommended, but I won't post it. I'll say instead that my wife and I had an adjusted gross income of $23,851 this year - only about 160% of the poverty level. We paid a total of $199 in Federal income taxes, net of the MWP credit. We aren't eligible for the EITC because we don't have children - the EITC limits are much lower than our income. We also paid a total of (I believe) $2,640 in Social Security and Medicare taxes. That figure works out to a tax rate of 12%. We are struggling to get by, but we are contributing towards our communities, and we expect our contribution to rise with our income in the years ahead. I have no beef if people making less than we do owe no net Federal taxes - most of them have children to feed. We ought not to tax people in poverty.