Wednesday, December 14, 2011

Most American's Pay NO TAXES?!

Taxes are all about the numbers. Tax rates, income brackets and what you may owe or get back as a refund from the I.R.S. An analysis by the Joint Committee on Taxation found that the majority of Americans get a free ride on the backs of the minority. The Committee found that only 49% of Americans in 2009 paid any taxes, 51% paid no taxes at all. The same report also pointed out that 30% actually made money, profited thanks to the tax code.

The Joint Committee said  the 2009 figures are not yet final, but the unofficial results are devastating enough. We are now a 'nanny state' where the minority pays for and takes care of all the governmental needs of the majority, and some of the minority actually make money off the tax code (i.e. Earned Income Credit).

The Joint Committee numbers are slightly higher than the recent report by the nonprofit Tax Policy Center that said around 45% of U.S. households will end up paying no taxes. Again, these studies look at income taxes, not other taxes such as FICA payroll taxes that go toward the Social Security and Medicare programs.

A Tax Fairness hearing has been requested by the Seante Finance committe to look into the distribution of tax benefits and the overall burden of the tax code to those who pay the taxes. In his opening remarks, Senate Finance Chair Max Baucus (D-Mont.) pointed out the perception by many taxpayers that loopholes and tax benefits exist mainly for the rich. This, he said, makes it difficult to achieve the goal to see a fairer and more equitable tax system.

Reconciling the tax loopholes so that everyone is satisfied, including the U.S. Treasury and the IRS, is no easy task. Senate Finance Ranking Member Orrin Hatch (R-Utah) said in his opening statement, "How Washington politicians hope to determine this fair share in an even-handed way that does no harm to our economy and job creators remains a mystery to me." You sure can bet that Hatch and his colleagues will get lots of suggestions of how to solve the tax code problem as the debate continues.

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