Quote:
Originally Posted by redpoint5
Half of US households pay zero (or less) federal income tax, so people respond to incentives, including ones to be less economically productive.
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The highlighted text is key. Yes, about 40% of US households pay no federal income taxes (2022 numbers). However, those aren't the only taxes or even the only Federal taxes. They are also the only category of taxes that are progressive where the wealthy pay a larger share of their income - so income taxes are consistently criticized by conservatives.
The other large federal tax is payroll taxes. A flat 15.3% of all reported wages up to $176K for 2025. After that it drops to 0%. Which makes it regressive as those that earn above the cap pay a steadily declining tax percentage. Also investment and rental income is not subject to payroll taxes - which also is quite regressive as the vast majority of investment income is earned by the wealthier households. (Top 1% earn 69% and the top 20% of household earn 90% of all capital gains)
Then there are state taxes - which also tend to be regressive with a few exceptions. Sales taxes are regressive as poorer families not only spend a much larger percentage of their income but also spend more money on things that are taxed. Product segments that wealthy households tend to spend money on generally are not subject to sales tax.
About the only neutral major tax is property tax. It tends to be flat and (almost) everyone pays it. Of course nothing can be simple and some groups pay less property tax (farmers for example) and some pay none at all if they negotiate special tax breaks for their specific industries. (and again, those special breaks go to wealthy households)
So in conclusion - if we are going to talk about taxes we need to talk about
ALL taxes, not just the ones that hit wealthy households harder. Almost no one in the USA pays nothing in taxes.
Federal revenue by source:
49% Individual Income Taxes
40% Payroll Taxes
4% Corporate Income Taxes (should be eliminated)
3% Excise Taxes
2% Custom Duties
1% Estate Taxes