Thanks to a combination of deductions and “refundable” tax credits, millions of Americans find that not only do they not have to pay income taxes, the government actually has to pay taxes to them! In 2017 alone, these “negative income tax rate” filers cost actual taxpayers over $56 billion in payouts.
According to the most recent IRS data available, roughly 40% of American tax filers paid a negative income tax rate for tax year 2017. To be clear, this is not referring to Americans who received a refund of the money they paid ahead of time via payroll withholdings, which is quite common in and of itself. Rather, 40% of Americans used a combination of tax deductions and tax credits to reduce their total annual tax liability to the I.R.S. to less than $0.00, and then received extra money that they did not earn as a form of tax welfare.
More specifically, the I.R.S. breaks down the data into different income groups (negative rates are in bold):
$1 to under $10,000: -8.7%
$10,000 to $20,000: -10.6%
$20,000 to under $30,000: -2.5%
$30,000 to $50,000: 4.2%
$50,000 to $100,000: 8.8%
$100,000 to $200,000: 12.6%
$200,000 to $500,000: 19.2%
$500,000 to $1 million: 25.4%
$1 million to $1.5 million: 27.6%
$1.5 million to $2 million: 28.3%
$2 million to $5 million: 28.7%
$5 million to $10 million: 28.3%
$10 million or more: 25.6% … See MoreSee Less
