Earlier this week, Mother Jones released a tape in which Republican presidential candidate Mitt Romney criticized the estimated 47% of Americans who don't pay federal income tax. While Romney's comments may have cost him some political points, they also re-energized a long-running public debate over who pays into America's system, and who reaps its rewards. With that in mind, we compiled a short quiz about the taxation system. If you think you know how America's taxation works -- or just want to learn a little more -- take a peek!
Pop Quiz: Who Are the 47% -- And How Much Do They REALLY Pay?
Pop Quiz: Who Are the 47%, and What Do They Really Pay in Taxes?
Most tax filers pay payroll taxes like Social Security and Medicare. In fact, only 18.1% don't send anything to the Federal government. Of these, almost 57% are elderly, and don't bring home a regular paycheck.
A. 1.2 million
More than 162,000 people who are among the top 10% of all earners -- basically, those who make over $163,173 -- didn't pay any federal income tax in 2011. Among the top 0.1% of filers -- the richest households in the country -- 3,000 (2.3% of them) didn't pay income tax in 2011.
A. Red states
B. Blue states
C. They're about equally distributed
Of the 20 states with the highest percentage of non-income tax-paying filers, twelve are firmly in the red camp. On the opposite end of the spectrum, just three of the 20 lowest-percentage states skew red.
In terms of total effective tax rate -- the total percentage of income that a taxpayer sends to the federal government, from excise taxes, corporate taxes, payroll taxes, and other levies -- the poorest fifth of Americans pays an average of 17.4%. The top 1% pays 29%, so they pay 11.6% more than the poorest 20%.
The top 20% of taxpayers pay 63.1% of all taxes and take home 59.6% of all income. In fact, all income groups pay a percentage of the total federal tax revenue that is almost equal to the percentage of America's income that they take home.
A. The bottom 20% of earners
B. The top 1% of earners
While state taxes vary depending on where you live, every state hits the working class harder than the top 1%. The best state is Vermont, where the richest 1% pay 7.5% of their income and the poorest 20% pay 8.2% -- or 1.1 times as much. The worst state is Washington, where the richest pay a measly 2.6% of their income and the poorest pay a staggering 17.3% -- or 6.7 times as much.
In terms of total effective tax rate -- the actual percentage of income paid into taxes, accounting for all credits, exemptions, deductions, and so forth -- the richest 1% of the country pays 29% of its income. The middle 20% pays 28.3%, or 0.7% less. For that matter, it's worth noting that the poorest 20%, the group least likely to pay federal income tax, still sends 17.4% of its wages to the taxman.
If you've made an error on a tax return you already filed or simply come across new information, such as a tax deduction or credit you now realize you qualify for, file an amended tax return to make the correction. The Internal Revenue Service (IRS) knows the tax code is complex, and that people make mistakes. The process for filing an amendment is straightforward. Simply file Form 1040X, Amended Tax Return, along with the corrected or additional documents you did not originally file with your return.
Congress has passed the largest piece of tax reform legislation in more than three decades. The bill went into place on January 1, 2018, which means that it will affect the taxes of most taxpayers for the 2018 tax year.