Tuesday, September 18, 2012

Who does pay taxes anyway?

Romney's comments do raise a question that surfaces from time to time: who pays taxes? and what type of taxes do different people pay? Romney's point was about the income tax. Everyone lays some type of tax. Since we will be discussing budgeting and fiscal policy soon enough, I'll post a few items on this topic starting with this one.

Some smart guys at the Hamilton Project (you should know a few things about Alexander Hamilton by now) posted information about this in April of 2012. I'd recommend at least a glance at it.

A couple points made in the article, the number of people who pay income taxes corresponds to the state of the economy. In 2007, 13% more people paid income taxes than do so now. And the percentage increases when payroll taxes (the money drawn from your check to pay for Social Security and Medicare) is included.
And the percentage of people who pay income taxes varies depending on age. If you are young, you have deductions based on child care - and your income might be low enough to qualify for the earned income tax credit. If you are old - you aren't working most likely. Here's a graph charting this. So one of the factors determining how much someone pays in income taxes is how old one is, meaning how much someone is likely to be earning.