The Truth about People Who Don’t Pay Taxes
Though some Americans do not pay taxes, it is not at the rate some have led taxpayers to believe. Roughly 47 percent of Americans do not pay taxes, but there are legitimate reasons behind it, with the most obvious being that they do not earn enough income to file.
Republicans on State and Federal Aid Programs
It is reported that republican Americans are more likely to be on government assistance programs like food stamps and Social Security. Individuals receiving Social Security, either traditional or disability benefits, do not pay taxes. Those on food stamp programs typically do not earn enough to file a tax return.
Those who are on state aid programs do not stay there forever, in most cases. Once those Americans obtain higher paying jobs or second incomes, they start filing tax returns and paying taxes.
Students and Retirees
Students and retirees typically don’t have enough income to tax. Retirees who are on fixed incomes without investments, additional sources of income, annuities, or retirement plans are not taxed. Now, if retirees do have significant income from multiple streams of income, they must file a tax return as taxes are due on disbursement payments from individual retirement accounts, annuities, and taxes are due on capital gains.
Final Thoughts
There are wealthy Americans across all political parties who avoid paying taxes because they’ll have to pay a large amount. There are also cases where wealthy individuals obtain their wealth from illegal or quasi-legal practices, meaning that they could end up in huge financial trouble and under investigation by the IRS.
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The Top 5 Highest State Tax Rates
No one enjoys paying taxes. The fact that we have to pay taxes is an unfortunate reality for U.S. citizens. However, you should not pay more taxes than you are required. One way to avoid paying a lot in taxes is to live in states with low tax rates. In this article we will discuss the five states which have the highest local tax rates.
(1) New York
New York has the highest tax rate out of all the U.S. states. You have to pay big money in taxes for that Big Apple lifestyle. New York residents pay an average of $9,718 in state and local taxes. These residents pay a rate that is 39 percent higher than the national average.
(2) California
Living in a state where it supposedly never rains sounds like a great idea, right? That pleasant weather will hurt your pocketbook. California residents pay an annual average of $9,509 in local and state taxes. They pay a rate that is 36 percent higher than the national average.
(3) Nebraska
Nebraska ranks third in the nation when it comes to the amount paid for taxes. Nebraska residents pay a total of $9,450 in local and state taxes. Nebraska residents pay a rate that is 36 percent higher than the national average.
(4) Connecticut
Connecticut residents pay an annual average of $9,099 in local and state taxes. Residents of this state pay 31 percent higher than the national average. This state ranks fourth in the nation.
(5) Illinois
Residents of the state of Illinois pay an annual average of $9,006 in state and local taxes. Illinois residents pay a rate that is 29 percent higher than the national average.
Those are the states with the highest tax brackets. If you live in one of these states and you don’t like these numbers, you could move to a nearby state with a lower tax rate.
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Should America Be Expecting a Tax Increase in the Future?
Americans should expect some sort of tax increase within the next decade. Most of this hangs in the balance of the upcoming Presidential election. Republicans wish to lower taxes and democrats wish to increase taxes, while providing other services. In the United States, personal income and corporate tax rates are expected to fluctuate, although citizens and business owners would both prefer to see them decrease.
2016 Election Dependent
Whether or not the American people are going to see an increase in taxes is heavily dependent on who becomes the nation’s next president. If a Democrat is elected, Americans can expect to see an increase in personal income and corporate taxes, although it will be higher if Bernie Sanders is elected.
Republican candidates have plans to reduce taxes. Donald Trump plans to lower personal and corporate income taxes to flat rates hovering around 15 percent. Ted Cruz and John Kasich also have plans to lower taxes.
National Debt Reduction
An increase in taxes is said to be what the nation needs to reduce the national debt. Our nation is currently sitting at a 74 percent gross domestic product. The smallest GDP recorded since WWII was 23 percent in 1974.
Bottom Line
Closing the gap on the national debt has to come from somewhere, and the government refuses to cut frivolous spending. Taxes must be raised to make up for it. Rising taxes is not simply a matter of having a larger budget for its own sake; it is about working toward reducing national debt and stabilizing the economy over time.
Image credit: Susannah Storch
