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Posts tagged federal income tax
Why Half of Americans Don’t Pay Income Tax
Sep 18th
Mother Jones has published a video of Mitt Romney at a private fund-raiser making incendiary remarks about Obama voters – and, well, about half of the electorate.
“There are 47 percent of the people who will vote for the president no matter what,” Mr. Romney said. “There are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it, that that’s an entitlement. And the government should give it to them. And they will vote for this president no matter what.”
“These are people who pay no income tax,” he added.
I’ll address just that last part in this post.
Mr. Romney is absolutely correct that about half of American households do not pay federal income tax. (He is also tapping into a now long-running vein of conservative anger at those households.) But he is missing some crucial context on why they do not pay federal income tax.
The nonpartisan and highly respected Tax Policy Center derived the 47 percent number – it is actually 46 percent, as of 2011 – and published an excellent analysis of it last summer.
It found that about half of the households that do not pay federal income tax do not pay it because they are simply too poor. The Tax Policy Center gives as an example a couple with two children earning less than $26,400 a year: The household would pay no federal income tax because its standard deduction and other exemptions would simply erase its liability.
The other half, the Tax Policy Center found, consists of households taking advantage of tax credits and other provisions, mostly support for senior citizens and low-income working families.
Put bluntly, these are not households shirking their tax liabilities. The pool consists mostly of the poor, of relatively low-income working families and of old people. The tax code is specifically designed to reduce the burden on them.
Indeed, the recession and its aftermath have left tens of millions of workers out of a job or underemployed, removing more households from payment of federal income taxes. Moreover, the Bush tax cuts – the signature Republican economic policy of the 2000s, which doubled the child tax credit, increased a number of other deductions and exemptions, and lowered marginal tax rates – erased millions of families‘ federal income tax liabilities.
It is also worth noting that though tens of millions of families do not pay federal income taxes, there are virtually no families that do not pay any taxes – between payroll taxes, sales taxes, state and local taxes, and on and on.
For much more detail on the 46 (or 47) percent, read my colleague David Leonhardt’s 2010 column or my 2011 piece for Slate.
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Report: Legal loophole allows GM to avoid paying federal taxes… still
May 7th
Filed under: Government/Legal, GM, Earnings/Financials
The United States tax code will never be accused of being simple or easy to comprehend. With a tangle of exceptions and loopholes, individuals and corporations can work their way around paying their full income tax rate with ease.
According to The Detroit News, General Motors continues to avoid paying its federal income taxes since the company exited bankruptcy. In 2008, the Treasury Department ruled that the automaker could use $18 billion in losses from “old” GM to offset any profits. That means from a tax perspective, GM still hasn’t earned enough money to overcome its losses. The automaker has raked in more than $13 billion since 2009.
Of course, GM isn’t the only company dodging the federal income tax. Ford, for example, payed $268 million in worldwide income taxes last year, despite claiming an income of $7.8 billion. Likewise, since Chrysler Group, LLC. is a limited-liability partnership, it isn’t required to pay federal income taxes. According to The Detroit News, very few companies pay the full 35 percent federal corporate income tax rate.
But that doesn’t mean GM or other companies get off entirely. GM says it pays considerable state taxes, and the company reports that its global tax rate for 2012 may jump to 12 or 13 percent, up from an earlier estimate of 10 percent.
Legal loophole allows GM to avoid paying federal taxes… still originally appeared on Autoblog on Mon, 07 May 2012 09:28:00 EST. Please see our terms for use of feeds.
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Herman Cain’s 9-9-9 tax plan: Break for the rich?
Oct 11th
Herman Cain has a plan to radically reform the nation’s tax system and make things a lot simpler for taxpayers.
Problem is, it could end up adding to the deficit and shifting the tax burden away from the wealthy and onto the poor, according to some leading tax experts.
Cain, who’s recently moved up in the polls to become one of the leading Republican presidential candidates, is basing much of his campaign on what he calls the 9-9-9 plan, which would get rid of almost all current taxes and replace them with a 9% flat tax on income, a 9% flat corporate tax and a 9% national sales tax.
Cain claims his system would raise as much tax revenue as the current complex system of federal income tax, corporate taxes and payroll taxes. And he believes his plan could bring in additional revenue by boosting economic growth.
Tax experts from various nonpartisan think tanks
Read More from the Article Source: http://us.rd.yahoo.com/finance/news/rss/story/*http%3A//finance.yahoo.com/news/Herman-Cains-999-tax-plan-cnnm-976918316.html?x=0
Some U.S. firms paid more to CEOs than taxes: study (Reuters)
Aug 30th
Reuters – Twenty-five of the 100 highest paid U.S. CEOs earned more last year than their companies paid in federal income tax, a pay study said on Wednesday.
Tax tips: Get on the e-file bandwagon
Aug 1st
Filed under: Tax
If you’re not filing your federal income tax returns electronically, you are in the minority. The Internal Revenue Service has seen a big jump in the number of taxpayers using e-file over the last 10 years. In 2008, almost 58% of the 155 million tax returns filed were filed electronically, and it’s time for you to get on the bandwagon.
There are plenty of benefits to electronic filing, and probably the most popular is the speed with which you can receive your tax refund. If you opt for direct deposit of your refund, you can usually expect your money in one to two weeks.
If you prefer a paper check, plan on a couple of extra weeks. In contrast, those who file paper returns never know when they’ll receive their refunds. It could be several weeks or a couple of months, depending on how busy the IRS is.
The other big benefit to e-filing is accuracy. If you send in a paper tax return, someone at the IRS has to key your data into their computer system to check it against other records they have on file for you, such as W-2s and 1099s. If you file electronically, that manual process is eliminated, and you are virtually assured that the information on your taxes will end up in the IRS computers exactly as you sent it.
The IRS makes it easy for everyone to e-file. Almost every tax preparer around the country (except for a few old school types) offers e-file. And if you make $54,000 or less, you’re able to e-file for free with programs in which the IRS participates
Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.
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No income tax payments for nearly half of us!
Aug 1st
Filed under: Tax, Tax – Credit, Tax – Deduction, Taxes, Saving Money
Early tax projections from the Tax Policy Center suggest that 45% of Americans will pay no federal income tax for 2009. Credits, deductions, and tax breaks have whittled down the federal income tax liability for most Americans — from the poorest to the wealthiest — such that many Americans will pay no tax or will receive a refund of all taxes paid into the system in 2009.
Shocking, isn’t it? Not really.
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Overlooked deductions: job search expenses
Aug 1st
Filed under: Tax, Tax – Deduction, Taxes
The national unemployment rate stands at a whopping 10% — higher than it has been for years. Despite all the talk in Washington about creating new jobs, the outlook is pretty scary: When the economy was recovering from the 2001 recession, it took two years to reduce the unemployment rate by nearly a full percentage point. For that to happen in 2010, a net total of about 3 million jobs would have to be created.
Realistically, that means tens of millions of Americans were searching for new jobs in 2009. Job interviews, resumes, and fees related to a job search can add up. Fortunately, those expenses are deductible on your federal income tax return. Here’s what you need to know:
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No income tax payments for nearly half of us!
Aug 1st
Filed under: Tax, Tax – Credit, Tax – Deduction, Taxes, Saving Money
Early tax projections from the Tax Policy Center suggest that 45% of Americans will pay no federal income tax for 2009. Credits, deductions, and tax breaks have whittled down the federal income tax liability for most Americans — from the poorest to the wealthiest — such that many Americans will pay no tax or will receive a refund of all taxes paid into the system in 2009.
Shocking, isn’t it? Not really.
Continue reading No income tax payments for nearly half of us!
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Seven Checks You Can Cash Free of Federal Income Tax
Aug 1st
Ronald Reagan once famously remarked that the government’s take on the economy was, “If it moves, tax it.” At tax time, it can feel as though that’s true.
Realistically, though, not every dollar you receive is taxable (even though in some circumstances, it may still be reportable). Following are seven checks that you can cash, federal income tax free:
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Tax Cheaters Tend to Be Young, Single Men
Aug 1st
Filed under: Tax, Saving Money
Male, single, age 45 and under.Big spender.
Sounds like a dating ad from the classifieds, right? Not quite. That, according to a study by the advertising and marketing firm DDB Worldwide Communications Group, is the profile of the person most likely to cheat on a federal income tax return.
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