During the last presidential election, much was made of the fact that nearly half of Americans paid no federal income tax in 2010. But is it true? A new 4 minute illustrated video from The Urban Institute explains who doesn’t pay income taxes and why. The video debunks the myth that large portions of the country ‘don’t pay taxes’. Although some households don’t pay federal income taxes, all households inevitably pay other taxes (sales and property, payroll, and/or state income taxes).
Just 14 percent of all U.S. households pay neither income nor payroll taxes; that’s because most of those households are elderly and retired from working. As we’ve blogged about previously, Oklahoma’s tax system ends up taking a much larger share from middle- and low-income families than it does from wealthy families, even as the state’s poorest households are exempt from federal income taxes.
To learn more visit the Tax Policy Center, a project of the Urban Institute and Brookings Institution.