Who Does Not Pay Federal Income Tax?


The top 50 percent of wage earners in the United States pay nearly all income taxes (97 percent), according to the Internal Revenue Service (IRS). With such a disparity between the people who pay and how much they pay, it should not be surprising that a growing number of people pay no taxes at all or get money back from the government.

Filers Who Don’t Owe

In 2006, about 32 percent of people filing tax returns owed no tax, according to the Tax Foundation and IRS. About 136 million returns were filed, but 43.4 million of them had no tax liability or those taxpayers got back more than they paid into the system. The 43.4 million returns represented about 91 million people.

People Who Don’t File

The Tax Foundation estimated there are another 15 million households that don’t even bother to file a tax return. This represents another 30 million individuals who pay no income tax.

The Grand Total

In all, about 121 million people or 41 percent of the U.S. population paid no federal income tax. This is why 50 percent of the population paid 97 percent of the taxes. In essence, they had to pay the taxes the others did not pay.

A Profile

Using the IRS data, the Tax Foundation compiled a profile of the type of person most likely not to pay taxes — single (33 percent likely) or head of household (66 percent likely). The main reason is that these people tend to earn lower incomes than married couples and head of household taxpayers tend to be single parents with dependents (children).

Where They Live

The nonpayment people as a percentage of taxpayers in a particular state can vary widely. States where the standard of living is lower are more likely to have people not paying. The five states that have the greatest percentage of nonpayment are Mississippi (43 percent), Louisiana (40 percent), Arkansas (38 percent), New Mexico (38 percent) and Alabama (38 percent).

The Problem

As the base of nonpayment grows, the pool of taxpayers will shrink. This means that a greater burden will be placed on the taxpayers to maintain the same level of services for all citizens.

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