Monday, August 2, 2010

finance article: federal income tax

i've been reading some interesting finance articles lately, and this stuck with me: nearly 47% of americans paid no federal income tax in 2009! can you believe that?  (and that is just all of the people who filed returns).  now i am not complaining about all of the nice deductions and credits, especially for parents, but this seems a little unnerving.  actually it just kind of makes me want to not work...and have another baby.

with current tax laws, a family who earns $50,000 annually with 2 kids pays no federal income tax!  this seems a little unfair to tax payers without children.  here's the breakdown (copied from the article):

$50,000 income
(11,400) standard deduction
(14,600) personal exemptions ($3,650x4)
=$24,000 taxable income
fed. income tax on $24,000 is $2,769

+$2,000 in child tax credits (1,000 for each kid)
+800 making work pay credit

=+31 back from the government. 

something about that just does not seem right.  $50,000 is not a poverty income.  the top 10% of earners in the u.s. pay 73% of the income taxes collected.  i would be so frustrated if that was me.  everyone wants the best education systems, health care, public safety, etc. yet half of americans pay no fed. income taxes to fund them!  something interesting to think about...

in other news, i really miss parker.  can't wait to see him again on thursday! 

doesn't he look grown up in this picture??  love him.  love yall.  sweet dreams.


Erin said...

I love all the posts!! I was also caught off guard by the 47% statistic, but I think it's mainly due to the recession. In 2006 lucky duckies made up just under 1/3 of the population.

I don't mean to be a stickler, but it does make sense that the top 10% of earners pay 73% of taxes (especially if 1/3 of people pay no taxes). It is also true that the top 1% of earners pay 50% of the taxes and these are individuals making more than 1.6 million / year.

All in all a progressive tax system is the way to go, and even if I was a single lady making $250,000 with minimum deductions (no charity or IRAs), I would still only pay 25% of my income to taxes. Very low compared to any other country providing the same level of social services. (In Britain you would be paying 36%.)

Anyway, keep up the blogging. You've almost motivated me to start again. :)

Dawn said...

Silvy, I love your blog!

I find this one especially awesome, being in banking-I usually see why it benefits people to have tax incentives like this.

Cost for families add up quite quickly, and leave them living pay check to pay check.

If a family paid $500/month for health care, $260/week for daycare, and $800/month in rent or mortgage, the total costs would be $29,120 or 58% of their income.

When you add in utilities, food, clothing, medical costs of Dr.'s visits/prescriptions, car payment/maintenance, it becomes easy to see how these people are lucky if they can even save anything for emergencies or retirement. It makes sense that we ask people with no children to pay taxes to try to create a better life from the beginning for people.

On the other hand, do not get me started on how people in society today lack poor decision making skills when it comes to their finances!!

Great post!