By the Editors September 21, 2012
By now, most financial journalists have probably seen the video of Mitt Romney citing a tax statistic – that 47% of Americans “pay no income tax” – to explain his campaign strategy. The grainy video, which shows Mr. Romney speaking at a fundraiser in May, almost immediately sent journalists scrambling for data on who pays what in taxes.
Some quick reporting suggested Mr. Romney’s factoid had come from a study (Full report) conducted by the Tax Policy Center, a nonpartisan group that tracks and analyzes tax data. The study, which was published in July 2011, had projected 46% would pay no federal income tax that year. (The majority of them would probably pay other taxes, according to the study.)
But that was a projection. As of now, neither Mr. Romney nor the Tax Policy Center knows how many Americans paid federal income tax in 2011. No one does. Many taxpayers filed for an extension and haven’t even sent in their returns.
For real data on who paid what in federal taxes – income or payroll – journalists should go to the agency charged with collecting them: the Internal Revenue Service. Although the most recent numbers available are from tax year 2009, the Statistics of Income division of the IRS is the definitive primary source for federal revenue data. The agency typically publishes a new year of tax data about a year and a half after it has received the returns, so 2010 should be coming soon.
Using IRS Data
The IRS maintains a webpage on individual income tax returns that includes links to detailed Excel files for each of the last fifteen tax years. There are data sets organized by taxable income and separately by marginal tax rate.
Take a look at tax year 2009 organized by marginal tax rate. Note that the top line of data (row 10) shows that Americans earned about $5 trillion in taxable income that year and paid about $865 billion in federal income taxes. Also note that these data are broken down by filing status (married, single, etc.), tax rate and tax rate. We can see, for example, that Americans in the 25% tax bracket generated about the same amount of revenue as those in the top (35%) bracket. We can also see each bracket’s contribution from capital gains.
Now, take a look at the same year organized by tax rate and adjusted gross income. Here, we can see that the group making the largest contribution in 2011 was households making $100,000 to $200,000.
The consistent format of these files makes year-over-year comparisons fairly easy, but the IRS has grouped a lot of that data together by year here.
For more help sifting the IRS data, call the agency’s media relations office.
Finding Out Who Paid No Income Tax
The IRS keeps a separate page for data on the taxes paid by the nation’s top earners. These tables include data on the number of returns with and without US income tax. Table 11 includes annual breakdowns of the number of returns without any taxable income and breaks the data down by tax rate and size of income. Note that in 2009, the percentage of Americans who paid no federal income tax was 35%. That number has almost certainly gone up over the last two years. Good journalists do not deal in almost-certainties.
Tracking All Federal Taxes
Although the Tax Policy Center projected the percentage of Americans paying no taxes had climbed to 46% in 2011, it also projected the percentage paying no federal taxes would be about 8%. That’s because even the very poor pay the payroll tax, which covers Social Security and Medicare.
For historical tax data that includes these contributions, check the Congressional Budget Office’s comprehensive study of household income and federal taxes released in July. (Note that the tax data go only as far as 2009). The supplemental tables include an Excel file of average federal tax rates (including income and payroll taxes) broken down by income groups from 1979 to 2009.
This entry was posted on Friday, September 21st, 2012 at 7:55 pm. It is filed under Skills and Tradecraft and tagged with household income, IRS, medicare, social security, taxes. You can follow any responses to this entry through the RSS 2.0 feed.
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