She asked, "Who are those people who pay no taxes?"
By kenzie45230
@kenzie45230 (3560)
United States
August 4, 2011 10:43am CST
The woman with whom I've had many online conversations asked the question, "Who are these people you say pay no taxes?"
I responded, "You might be one yourself."
"Absolutely not," she said. "We pay our taxes."
"Okay, but let's examine that. You said you got a tax refund last year, right?"
"We did."
"Was your tax refund more than you paid in taxes?"
"Well... I have the forms right here because I was looking up our gross and net pay. Just a minute...."
I said, "You don't have to tell me how much you earned or how much you paid in taxes. But if you take your refund amount and subtract what you paid in taxes, what do you get?"
"$1200," she responded.
"Okay. So the government returned everything you paid in plus gave you $1200 more. Doesn't that prove that you paid no taxes?"
"Absolutely not! WE PAID OUR FAIR SHARE!"
"But let's pretend you paid in $3000 in taxes..."
"We paid more than that!"
"I said let's pretend. Okay, let's pretend that you paid in $3000. The government sent you a refund check for $4200. That means they returned every penny of taxes you paid, plus they gave you $1200 more than you paid. So, in essence you paid no taxes at all."
"But we did! We paid our taxes!"
"And the government returned them to you in full and gave you $1200 more."
"So you think we paid no taxes."
"I think you just proved that."
"Didn't you get a refund too?"
"We did. But if you take what we paid in taxes and subtract what we got in a refund, we still paid a huge chunk of money in taxes. We did not get a refund of all of our taxes and we didn't get a refund that exceeded our taxes."
"That's not what you asked me. Do it the same. Take what you got as a refund and subtract what you paid in taxes like you asked me to do."
"Okay. The answer is a negative number."
"How can that be?"
"Because we did pay taxes. What we got back as a refund was less than what we paid in taxes."
"I don't think I understand."
"I don't think you're alone."
Ms. X logged off.
**********
I guess she didn't want to talk about it any more. Hope I answered her question.
There are many people in that position - people who received refunds in excess of the taxes they paid. And there are many who paid no taxes who also receive "refunds." I think one would actually call those "entitlement payments" not "refunds". How can it be a true refund if there was nothing to refund? When used as a noun, refund means the money returned, usually from a purchase of a dissatisfied customer.
I'm not sure why this is difficult to grasp. At TEA party rallies, we lamented that half of income earning Americans pay no taxes at all. And yet, those very people who pay no taxes are the ones who insist that those who do should have their taxes raised so that those who do not can continue to get more and more "entitlements." There's something wrong with that picture.
Here's one explanation I found....if the above still hasn't explained it.
There are so many breaks that 45 percent of U.S. households will pay no federal income tax for 2010, according to estimates by the Tax Policy Center, a Washington think tank.
http://www.thegatewaypundit.com/2011/04/half-of-all-americans-pay-no-income-tax-may-get-a-tax-refund-anyway/
So why is it that the "rich" are demonized for following the tax code rules and the rest of us are not? The "loopholes" exist for us all. They're called deductions.
Shouldn't everyone with income pay SOME taxes? Wouldn't people have more ownership in how lousy our economy is and the state of our government finances, if they actually did pay taxes?
3 people like this
9 responses
@bobmnu (8157)
• United States
5 Aug 11
What you are talking about is the Earned Income Tax Credit. This is a good thing because it is redistributing income. Now when one of those evil rich people gives $100,000 to fund a scholarship for students who will study Math and Science it is call a Loophole and is bad because they are not paying taxes on that money. It is really simple if the government gives away your money it is good but if you give away your money it is bad.
2 people like this
@matersfish (6306)
• United States
5 Aug 11
That's about the size of it.
Do as government says, not as government does. They're the daddy. We're the inept children who need guidance.
It really is simple when you break it down. We should all be on our knees thanking them.
1 person likes this
@matersfish (6306)
• United States
4 Aug 11
It's true enough. People who have taxes taken out of their check assume that they're paying in a lot. That's undoubtedly what emboldens many to claim that those who make more should pay more.
But they fail to realize that, for them, "taxes" aren't really "taxes" at all, but more like a loan system. The government borrows money from you, and then depending on your situation, kids and all that, government pays it back to you with interest.
Almost every single person I've ever known in my social life gets a tax refund for at least 100% of what they paid in. (Sales taxes and other non-income-related taxes not included.)
On the plus side, this quasi wealth redistribution (or whatever you want to call it) does enable people to stimulate the economy in some small fashion. And I've even heard a few politicians and pundits argue that point. But that really doesn't wash. It's just more of government attempting to artificially prop up the entire economy, and then blaming fiscally-sound people and Wall Street when the entire thing blows up, never putting the blame on themselves or the people who they've convinced to spend over their heads.
While everyone's screaming for people to be taxed more, I wonder how much of a fuss would be created if all refunds stopped for a year.
Technically, that's not a tax increase at all. But how many would be out in the streets because they actually had to PAY taxes for a year? 
I don't get a refund at all. I only pay in. I've received refunds before with various jobs, and I can tell you that I loved it. I looked forward to getting my two checks in the mail - my state and then my federal. It was party time in the VA! WOOT!
If I didn't get a refund, oh, wtf - I'd be P'OD to no end! 
But maybe it's time to dip into that as long as politicians are willing to dip into everything else.
Stop simply giving money away to people because they have a kid, ffs. Plan for a kid and be a good parent! I understand falling on hard times, and my heart breaks for the truly needy. But, damn, having a kid should in no way entitle you to an extra 1k+ in free money every year. And the "kid" bit is probably only one of a hundred things that people can claim to get more free money.
Then turn around and stick it to people who make more money, wanting them to be the answer to America's problems?
As a self-employed small business guy, I'm disgusted by the whole premise of punishing success and rewarding mediocrity.
If we're not ready in 2011 to at least shrink the all-encompassing entitlement pool just a little bit, forcing a few more people to get out and make something of their lives, then we never will be. 2012, 2013, 2050 - no. Time won't change it. If we're not ready to change at 14,000,000,000,000, why would we be ready at 20,000,000,000,000?
Maybe stop giving refunds altogether and only tax 1/3 of what they tax now. That to me sounds a bit better for everyone. Leave it up to the individual to do the smart thing with the money.
I don't get a refund at all. I only pay in. I've received refunds before with various jobs, and I can tell you that I loved it. I looked forward to getting my two checks in the mail - my state and then my federal. It was party time in the VA! WOOT!
If I didn't get a refund, oh, wtf - I'd be P'OD to no end!
But maybe it's time to dip into that as long as politicians are willing to dip into everything else.
Stop simply giving money away to people because they have a kid, ffs. Plan for a kid and be a good parent! I understand falling on hard times, and my heart breaks for the truly needy. But, damn, having a kid should in no way entitle you to an extra 1k+ in free money every year. And the "kid" bit is probably only one of a hundred things that people can claim to get more free money.
Then turn around and stick it to people who make more money, wanting them to be the answer to America's problems?
As a self-employed small business guy, I'm disgusted by the whole premise of punishing success and rewarding mediocrity.
If we're not ready in 2011 to at least shrink the all-encompassing entitlement pool just a little bit, forcing a few more people to get out and make something of their lives, then we never will be. 2012, 2013, 2050 - no. Time won't change it. If we're not ready to change at 14,000,000,000,000, why would we be ready at 20,000,000,000,000?
Maybe stop giving refunds altogether and only tax 1/3 of what they tax now. That to me sounds a bit better for everyone. Leave it up to the individual to do the smart thing with the money.2 people like this
@GardenGerty (157665)
• United States
4 Aug 11
No matter how much we love the idea.
1 person likes this
@kenzie45230 (3560)
• United States
4 Aug 11
I don't understand the demonizing of businesses at all, especially small businesses. That's where most people are employed. Perhaps it would help if we made sure that every person we send to Washington has at some time in his/her life either owned or managed a business - even if it was a paper route or lemonade stand?
During the last election, someone shared a great flat tax idea.
Everyone pays one amount - 10-15% - no matter whether they're rich or poor, an individual or business. No deductions. No loopholes. Pretty simple to figure. Right away we'd need less people at the IRS. (And fewer accountants.)
The tax you pay goes to your local government. In my case, that would be the township.
The township sends 10-15% of what it collects to the county.
The county sends 10-15% of what it collects to the state.
And the state sends 10-15% of what it collects to the federal government.
Simple. And our local governments won't have to wonder if they can get a grant. There won't be any. They'll have first access to the money from their local citizens. I really liked that plan. Which, of course, means we'll never see it. 
1 person likes this
@GardenGerty (157665)
• United States
4 Aug 11
I am hearing this more and more lately, and had not thought of that until this year, but I know that what you are saying is true. Perhaps I did not realize that some people get back more than they pay in, I certainly do not. I have long favored the idea of a flat tax, on everyone, that would have no deductions, no refunds, we just all pay it, no headaches, etc. I am having that much held out of my unemployment while I look for work. I never have gotten more back than I have paid in. Some might say that unemployment is an entitlement, but I know I have paid into the fund all of my life, and this is the first I have drawn it.
1 person likes this
@matersfish (6306)
• United States
4 Aug 11
I think calling unemployment and SS "entitlements" is a little backwards as well. At least in the sense that we think of "entitlements" today - free money.
To me, it's all insurance.
If you pay a health insurance premium and get really sick, you're undoubtedly going to rack up more expenses than money you've put in. But since there are thousands of other people not sick, the policyholder still receives care and the company still profits.
This is how government chooses to act, whether it be on the state or federal level. People are forced to pay in for unemployment and SS and other programs in a lot of cases, so they cannot really be "entitlements" in that context.
Entitlements are choking America, but the people who've paid in and who've kept these programs running are only receiving what they're rightfully owed. And if government wanted it different, they should have changed it long ago and should have stopped collecting their premiums.
They're the worst insurance company in the world.
3 people like this
@kenzie45230 (3560)
• United States
4 Aug 11
Well....unfortunately what is paid into both - unemployment and SS - is used up rather quickly.
I thought only business owners paid for unemployment insurance. I'll have to look that one up.
And SS? Most of us use up what we've paid in in the first 3-5 years and today people live 15, 20 or more years after retirement. SS was never really for OUR retirement but for current retirees. One can figure that out when you look at the history, right on their web site. The first person to receive SS paid in for 3 years - a total of $24. Her monthly checks were $22 and she lived 30 years past retirement. Her input was gone almost after the first month. And so it has been...
1 person likes this
@knoodleknight18 (917)
• United States
4 Aug 11
I totally agree with matersfish here if he's saying what I think he is.
We're not talking about literal insurance through a company. What is being said is that "entitlements" are a form of insurance, but it's an income based policy. Of course you have to understand the idea of insurance. It's like a community emergency fund, some people may need it and take more than put in but works because other will never use it, but if they didn't put into they wouldn't be entitled to use any of the funds. It's like a bad luck lottery, say out of 100 people 1 is going to lose his house, but no one knows who. So, instead of waiting around hoping it's not you. Everyone pitches in 1/100th of the cost of a replacement house, who ever loses their house gets the money so they can replace it. Of course in the real world insurance is for profit, so out of 100 people they might all pitch in 1.2% cost and the insurance agent keeps the remainder, in the governments case the funds are mismanaged.
So yes any "entitlement is really insurance, but only those who can afford it at the time pay into, some may take from it and never pay in, others may pay in and never take. Anyone on welfare has the potential to earn $1,000,000 a year later in life, if they do they'll pay back into the system. At the same time someone making millions could end up on welfare (yes, it happens) the problem is the structure doesn't generally allow for such changes.
@danishcanadian (28953)
• Canada
4 Aug 11
I think her point was that she legally did what she needed to do, and if the government saw fit to give it back to her, then great! I hear what you were saying, but I hear what she's saying too.
1 person likes this
@kenzie45230 (3560)
• United States
4 Aug 11
I'm not convinced that she ever really understood that she pays zero in taxes and gets a check to boot.
@ParaTed2k (22940)
• Sheboygan, Wisconsin
4 Aug 11
I got about the same response from a friend when I showed that people who work for the government aren't a net gain for the federal tax coffers.
This rocket scientist couldn't grasp that if all the money you make comes out of the government coffers, and you just return a small part back to it, you don't really add anything.
btw, I use the term "rocket scientist" literally, he worked for NASA at the time. :~D
1 person likes this
@kenzie45230 (3560)
• United States
5 Aug 11
I've had that same discussion with a college professor who is quite vocal about reminding people about all of his advanced degrees, but cannot grasp the idea that government jobs are not helping our economy.
Speaking of college professors....until the Wisconsin thing, I was not aware that college professors were also now government union workers.
Speaking of college professors....until the Wisconsin thing, I was not aware that college professors were also now government union workers. @abitosunshine (765)
• United States
19 Sep 11
Excellent way of making your point, pointing out something I had never thought about in this way. Looking at it this way, there certainly are many who are not paying taxes.
1 person likes this
@kenzie45230 (3560)
• United States
17 Dec 11
Sorry I missed your comment 3 months ago. Yes, looking at it this way, over 40% pay no taxes. Actually, I think it's up to 47% now. When it gets over 50%, those individuals who pay no taxes will be dictating to the rest of us - via their votes for people who will "give" them more - everything that happens in our country.
I actually had one person tell me that he didn't care if "rich" folks paid 110% of their income in taxes. At first, I thought he didn't understand percentages, but he did.
The only reason this mentality exists is because no one is teaching kids that they can be whatever they set out to be IF THEY WORK HARD ENOUGH. Instead, they are taught that folks who worked hard, who sacrificed, who often went years without making any profits in their business (or putting all profits back into the business so it could grow) are the bad guys and they owe everyone else.
I'm betting our forefathers weep for us.
@K46620 (1986)
• United States
4 Aug 11
It is important to note, only income taxes are not being paid by some; we all face the sales taxes, and others, most important of which is the inflation tax.
But you are right, it's quite unfair that some pay nothing or receive money while others are robbed of more than 30% of their income just to give to the IRS.
@BalthasarTheRat (656)
• United States
5 Aug 11
While you are correct in your math and propositions you are overlooking a very important truth: every legal worker in the US is also paying a Federal Med tax and a Federal Social Security and Disability tax. With average family deductions, these 2 taxes easily equal the withholding for Federal Income Tax that you are talking about.
In the instance you describe above, the lady ACTUALLY would have paid $6000 total in taxes (perhaps more), even getting her $3000 withholding back (after the government made a little interest on it), plus her EIC and/or Child Tax Credit bonus of $1200, she ended up paying $1800 dollars into the Federal coffers, not counting the interest on her withholding.
People who love the sound bite that "Alot of Americans don't even pay taxes" just seem to conveniently forget about the FACTS and then other mindless drones flock to their crazy opinions on the evils of government.
It's sad that I even had to bring this up. I'm a crazed reformist rat but I refuse to stoop to sound bites based on numerical deception to garner interest in my ideas.
Constant Vigil (But get ALL the facts, not just the ones you like or need for a point)
-The Economical Rat
@ParaTed2k (22940)
• Sheboygan, Wisconsin
5 Aug 11
Red Herring. We're talking about Income Tax, not FICA, not sales tax, not corporate tax... Income Tax!
@BalthasarTheRat (656)
• United States
5 Aug 11
I call shenanigans and counter your Red Herring with a Redder one.
The employer may pay it before we see it but it still comes out of our potential income. It is all stupid terminological deception to say it doesn't count just because you call it "Income Tax" only. Does the money go to the Federal government? Yes! Am I paying it out of what I could be bringing home based on my pay rate? Yes!
It's like saying bomb damage done to a city in WW2 only counts if the bomb was dropped with a bomber, not with a bomb-bearing fighter, just so you could tell someone a few hundred less bombs hit them during the war.
It's a trick of people who want to use that sound bite, nothing else!
Heck, we're not even into sales tax, user fees, sin taxes or anything else that really slams lower income America. But starting by saying too many Americans don't pay taxes at all and then focusing on the lower end instead of the "hide it in the Bahamas" or "take a million dollar deduction for being the child of someone famous" idiots is pure deception and grandstanding.
I'm sick of being quiet just 'cuz alot of people are too indifferent, or worse, too foolish, to listen. It's the rat's time!
-The Rat of Truth
@Rick1950 (1575)
• Lima, Peru
5 Aug 11
I think the counters are adequate to explain about the taxes to be paid. I guess in the USA there are tax benefits and your online-friend is getting them. If this benefit is not going against the law, is right. There are laws that might not please everyone or are not fair.
@kenzie45230 (3560)
• United States
6 Aug 11
It makes people who get something for nothing think they should get more somethings for nothing.
