47% of US Households Don't Pay Fed Income Tax

so who is paying and how much?

Nearly half of US households escape fed income tax
(4/7/2010 AP via Yahoo Finance)

WASHINGTON (AP) -- Tax Day is a dreaded deadline for millions, but for nearly half of U.S. households it's simply somebody else's problem.

About 47 percent will pay no federal income taxes at all for 2009. Either their incomes were too low, or they qualified for enough credits, deductions and exemptions to eliminate their liability. That's according to projections by the Tax Policy Center, a Washington research organization.

In recent years, credits for low- and middle-income families have grown so much that a family of four making as much as $50,000 will owe no federal income tax for 2009, as long as there are two children younger than 17, according to a separate analysis by the consulting firm Deloitte Tax.

What's more interesting to me is not so much that nearly half of US households do not pay to the federal government as this question: Then WHO pays and HOW MUCH?

10% of US households pay whopping 73% of the federal personal income tax.

If you go to another tax research organization called the Tax Foundation, you will find this article also, which says:

1% of US households pay over 40% of the federal personal income tax.

The above AP article also says that the bottom 40% actually make money in the form of tax credit from the government.

This article from the Tax Foundation in 2008 also tells us that the United States already has the most progressive (meaning pro-poor) income tax system among OECD nations. More so than the still very socialist France or Sweden. Under Obama, the pace is firmly set to accelerate.

With the introduction of VAT that one of the Obama's econ advisers Paul Volcker (hey whatever happened to that so-called "Volcker rule"?) wants his boss to introduce, America will become more "European" than Europe. Add cap and trade crap, and immigration "reform", all of which are designed to take in more and more from the tax-paying populace and give it to the "poor" through massive government bureaucracy as the government bureaucrats see fit.

I guess the president didn't grow up listening to one of Aesop's fables, The Goose That Laid Golden Eggs.

He surely hasn't heard of the early pilgrims who came close to extinction by having adopted the policy of forcible wealth redistribution.

Tweet

Obama's Health Care "Reform": What's New?

a lot more tax.

The White House has released its version of the health care reform bill, which is basically the Senate version with some so-called "compromise" to bait the Republicans. The president has declared that it will be voted in, using the Senate "reconciliation" process that requires only 51 votes instead of 60, unless GOP "cooperate" (meaning they capitulate to the president's bill).

It will cost $1 trillion over 10 years, and Obama claims it won't add to the federal deficit.

He is right. Because it will be funded by TAXPAYERS, whether they like it or not (61% of voters dislike it, and think it should be scrapped). The U.S. taxpayers will be forced to fund this monstrosity that will put IRS as the enforcer, penalties for individual and companies for not having a health insurance that is deemed "appropriate" by the government, tax investment income, tax branded prescription drugs and medical devices (they disingenuously call it "annual fee"), include "Cadillac tax", the government panel to decide on insurance premiums, and much more.

Probably the definition of "reform" has changed. It may not be "making it better", but "make a change, whether it is good or bad, but change nonetheless".

I am afraid the President is either several steps behind the general public, or he is tone-deaf. When Americans were more worried about deepening recession and job loss in early 2009, he declared health care "reform" and global warming legislation to be the top priorities. When Americans grew angrier at federal budget deficit and wasteful spending by his government, he decided to throw more money on job creation. When Americans feel they are totally tapped out and no more extra money to shell out to the government, he proposes, among other things, to tax even the unearned income so the taxpayers can pay for his health care reform which is really just an insurance "reform" which is not even a reform.

And his pitch? It won't add to the federal deficit.

SO WHAT? Americans don't have money for him.

Tweet

Treasury: Debt Limit to Be Hit by End of February

Ah the danger of cash method accounting.

(UPDATE 12:40 PM PST)

The House passed the legislation that would raise the debt limit by $1.9 trillion. The vote was extremely close, at 217-212, with all Republicans voting against and more than 30 Democrats joining them.

Remember, the Treasury Department said the new limit of $14.3 trillion would be hit by the end of this month.

---------------------------------------------
The debt limit, which would be raised by $1.9 trillion to $14.3 trillion, will be hit by the end of February, the Treasury Department says. It is THIS FEBRUARY.

As this blog posted on January 28, the Senate already passed the measure by 60-39 (Scott Brown of Massachusetts was not not seated back then)

Now it's the House's turn to vote today, and the increased debt ceiling will carry them till the end of February. What a joke.

US debt to hit proposed ceiling by end-February: Treasury
(2/3/2010 AFP via Google)

"WASHINGTON — The US debt is on track to hit a congressionally proposed debt ceiling of 14.3 trillion dollars by the end of February, the Treasury said Wednesday, a day ahead of a key vote to raise it to that level.

""Based on current projections, Treasury expects to reach the debt ceiling as early as the end of February. However, the government's cash flows are volatile, making it difficult to forecast a precise date," the Treasury said in a statement.

"The current limit on the public debt of the United States is 12.374 trillion dollars.

"The US debt exceeded 12.349 trillion dollars on Monday, according to Treasury data.

"The US House of Representatives will vote Thursday on whether to raise the US debt limit to a historic 14.3 trillion dollars, allowing the United States to borrow another 1.9 trillion dollars." [The article continues.]

Here's the Treasury Department's "February 2010 Quarterly Refunding Statement" dated February 3, 2010. Aside from the debt limit, there are several interesting things in that statement:

• "Treasury believes that auction sizes are at levels that give us the ability to adequately address a broad range of potential financing needs, while allowing the average maturity of debt to gradually extend. As such, Treasury anticipates that nominal coupon auction sizes will stabilize at current levels. "
• Treasury is considering increased auction of TIPS, including a second reopening of 10-year TIPS. This would result in six 10-year TIPS in a year. In 2009, there were four 10-year TIPS auctions.

The amount of Treasury notes and bonds issued has been stable at $200 billion per month. (See the chart here.)

The Treasury Department keeps two sets of books - one done by cash method, and the other by accrual method like everyone else. It is disingenuous of the policymakers to wring hands and plead that they need additional $1.9 trillion to get by this year, when they should know, by accrual method, that they will have used all that up by the end of February. This February.

Tweet

Why Bernanke Was Upset: Federal Debt vs GDP

This blog is not about chart technical analysis (that's mostly for my other blog) but I make an exception once in a while when the chart in question concerns a macro economic picture. The US dollar long-term chart the other day was one, so were several charts of Treasury yields.

Here's another that I found on Yahoo Finance Teck Ticker (6/4/09): Bernanke Freaks Out About Obama's Spending and Debt Plans

The article and the accompanying video is about Ben Bernanke's testimony on Wednesday before the House Budget Committee, where the Fed chairman warned against ballooning federal deficit.

The page has a chart of Gross Federal Debt as percentage of GDP, and that's what caught my attention. It is a very bullish chart. Which means it is very, very ominous for the country.

The chart shows a cup and handle breakout with the target value of 100 (the vertical distance from the bottom of the cup to the right side of the cup). Besides, the flat-top formation from year 2010 onward is considered one of the most powerful, bullish formation; i.e. explosive growth from there.

The Fed chairman is right to be freaking out. After all, Federal Reserve is an independent entity, and he would want to protect his institution and its member banks from the destructive force of the federal deficit his institution is obliged to monetize.

Tweet