My daughter made $23,000 last year. She not only paid 15% of her earnings in FICA, she paid over $1500 in Federal Income Tax and $200 in State income tax.
Like I said, who are these 50.5%
The state income tax payment is a non-sequitor as we're talking federal income tax.
Is your daughter self employed? If not, she didn't pay 15% in FICA, she paid half that, her employer paid the other half (yes, I understand the argument that if that tax wasn't there she COULD have the additional employer participation in her pocket, or not). FICA has been sold as insurance premiums (hence the I in OADSI) and most people think of it as a retirement program.
As far as the percentage of people not paying federal income tax, they aren't single without dependents, so you're daughter (if I may assume she's not claiming dependents) doesn't qualify. Mostly they are single parent households with low income and large number of dependents. Check form 1040A and don't forget to add that child tax credit (refundable) in. I don't know where 50%+ came from , but the IRS does show around 47% not paying federal INCOME tax (this does not include payroll tax regardless of the fact that those receipts end up in the general fund anyway). They may pay through withholding, but the combination of refundable tax credits like EIC and child tax credit result in no tax liability and in many cases a refund of free money they didn't pay in, ostensibly to offset their payroll taxes (see SSA for an explanation of the EITC).
And to add to this, recently we've had a nice expose of a tax "preparation" scam here in Tidewater VA (and in other states since the company is in multiple states) of a company called "Mo' Money" tax service that was fraudulently preparing tax returns of mainly low income people which netted huge refunds (they made their money on a percentage of the refund). Thankfully they've been outted and are under investigation.
She likely did not reach anywhere near the average deduction threshold. That is not married, no kids.
Oh, and FICA is distinct from Income Tax. As are all the other taxes that are not mentioned. For example, because there are corporate taxes, products are more expensive than they would be otherwise, so *if* a corporation pays taxes, then anyone who does business with them is paying an indirect federal tax, but not Income Tax.
Likewise, government deficit spending is a “future tax” which must eventually be made up for with government revenues. In effect, guaranteeing future high taxes to pay for things right now.
It is like someone stealing your credit card to buy a car, then giving the car to you as a “gift”, for which they expect you to use your money to buy them a car back. You only see the money you spend right now (Income Tax), and have no idea that you are about to get an enormous bill in the mail, which you will have to pay back to your cc company.
I own my own business. My profit is my salary, and that is what I pay my taxes on. This year we needed to make significant investments in equipment. I paid for them with cash. I am able to take accelerated depreciation on these items, which suck up a great deal of my profits for this year alone. As a result of that and my wife’s withholding, we ended up paying no income tax.
I guess I am one of the 50% that did not pay taxes. Yet I am working my tail off—60 hours per week easy.
Sometimes you need to look at the reality. I agree we need to change the rules. But are you saying that I should not take every deduction I am eligible for? I can spend that money better than the government.
It’s not always black and white.