61% of taxpayers paid no federal income tax in 2020, up from 44% in 2019

More than 100 million (61%) of taxpayers paid no federal income tax in 2020, up from 76 million (44%) of taxpayers in 2019.

The huge spike was due to large stimulus checks, high unemployment, and the generous tax credit programs which did more harm then good for taxpayers. Around 57% of Americans this year are expected not to pay any income tax. While it’s projected to have a fall back in 2022 with 42% and the remaining around 41% or 42% through 2025 (CNBC).

The high number of non-taxpayers is fueling debate in Congress. Many Democrats have been advocating for taxing more from the rich, citing a series of articles via ProPublica showcasing billionaires Jeff Bezos and Carl Icahn haven’t paid their federal income taxes for several years.

The $3.5 trillion reconciliation bill which is expected to be voted on once Congress returns from recess includes an increase in capital gains taxes, higher top rate on ordinary income, higher corporate tax rates, among other measures including taxing “wealthy” Americans who make $400,000 or more. Recently, Congress has increased the size of the child tax credit, the child and the dependent care tax credit, and the earned income tax credit.

A certain number of Republicans have argued that the progressive tax structure relies heavily on revenue from small groups who make a high income and major companies, as many Americans pay little or no taxes. According to Tax Policy Center, “The share of Americans who pay no federal income taxes has been hovering around 44% for most of the last decade” (RifNote). They write: “The top 20% of taxpayers paid 78% of federal income taxes in 2020, up from 68% in 2019. The top 1% of taxpayers paid 28% of taxes in 2020, up from 25% in 2019.”



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