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Wednesday, April 15, 2015

Beliefs About Taxes

Gallup reports:
As Americans confront the yearly deadline to pay their federal income taxes, 45% of U.S. adults believe lower-income earners pay "too much." This sentiment is up roughly five percentage points from recent years, but is still lower than a decade ago.
In fact, however, low-income Americans pay very little federal tax, as the Tax Policy Center explains:
Low-income households pay relatively low federal taxes, primarily because tax credits reduce or eliminate their income tax liability, and some (called refundable credits) result in net payments to them. Stimulus measures enacted to offset the adverse effects of the 2008-09 recession further reduced the tax-burden on these families. In 2011, tax units in the lowest income quintile (that is, the 20 percent of all tax units with the lowest incomes) on average paid federal income, payroll, and estate taxes equal to 0.8 percent of their cash income, less than a twentieth of the 18.1 percent average effective tax rate for all tax units (see table).