why do we have to pay income taxes

Last month, the Internal Revenue Service (IRS) released
(PDF). The IRS advises that [a]nyone who contemplates arguing on legal grounds against [paying taxes] should first read the 80-page document. Wikipedia, as does. There s hardly a constitutional amendment, law, or supposition that hasn t been used in an attempt to prove that income tax collection is invalid. As a constitutional lawyer who works for a tax policy organization, I m often asked whether the Sixteenth Amendment was properly ratified or (often more rudely) to show where the law is that requires people to pay income taxes. I find these arguments, like most constitutional law discussions, interesting. But ultimately the truth is that the Secretary of State on February 25, 1913, imposes tax on taxable income, defines taxable income as gross income minus allowed deductions, defines gross income as all income from whatever source derived, and requires the filing of returns by every individual with gross income for the year (with some exceptions). have upheld the federal government s power to collect income taxes against just about every argument. Judges have little tolerance for tax protestors, particularly ones who convince other people not to pay taxes while being deceptive about the enormous legal consequences.


Adherents who practiced what they preached are in jail for tax evasion, many for dramatically hefty sentences. And while the IRS may be less sinister than it was a few years ago, there s no doubting their willingness to use enormous power against individuals to collect tax revenue. As I tell people, the current federal income tax has a lot of problems. We at the Tax Foundation are no stranger to its complexity, favoritism, non-transparency, and the burden it imposes on the economy. But claiming that the tax doesn t actually legally exist hasn t been a productive avenue. Since our founding in 1937, we ve had hundreds of brilliant economists, lawyers, accountants, and policy analysts here, and they all paid their income taxes. If there was a way out, one of them would have found it. A little more than 43% of U. S. households -- or 70 million homes - will end up owing no federal income taxes for 2013. That's down from recent years because of an and the expiration of various tax cuts that were passed after the 2008 financial crisis, according to the nonpartisan Tax Policy Center, which published its latest estimates on Thursday.


The households with zero income tax liability are not evenly distributed across income groups. The majority this year -- nearly 67% -- have incomes below $30,000. "Many people who pay no income tax simply have too little income to owe tax. The rest benefit from the -- exclusions, deductions, exemptions, and credits -- that zero out the tax they would otherwise pay," said Roberton Williams of the Tax Policy Center. But that doesn't mean there aren't any nonpayers among. The Tax Policy Center estimates that a little more than 1% of nonpayers have six-figure incomes or more. Specifically, an estimated 798,000 households in the nonpayer group make between $100,000 and $200,000 a year; 48,000 have incomes between $200,000 and $500,000; 3,000 make between $500,000 and $1 million; and 1,000 households bring in more than $1 million. (Here are million-dollar households make the list. ) Quiz: Which state has the highest income tax rate? A misconception about those who end up owing no federal income taxes -- especially those with low incomes -- is that they pay no taxes at all.


In fact, most pay payroll taxes to support Medicare and Social Security as well as sales taxes and. However, there is a subset of households that still end up with no liability when income and payroll taxes are combined. The Tax Policy Center estimates 14. 4% of all households -- or 23 million -- fall into this group. "And two-thirds of them are elderly,". The issue of Americans with zero tax liability is a politically charged one. created an uproar on the presidential campaign trail last year after he incorrectly characterized this group as people who are "dependent on government" and "believe they are victims. " Lawmakers, too, often complain about the issue, even though Congress itself boosts the ranks of the nonpayers by passing new tax breaks and failing to review whether the old ones still make sense. But there may be less fodder for heated rhetoric in the years ahead. The Tax Policy Center estimates the percentage of households without federal income tax liability will continue to drop, falling as low as 34% of households by 2024.

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