@NCCapitol

More than a third of NC filers don't owe income tax

Posted September 19, 2012
Updated September 20, 2012

Map Marker  Find News Near Me

— Republican presidential nominee Mitt Romney's comments at a fundraiser earlier this year have sparked a national debate about who pays and who doesn't pay income taxes.

Romney was secretly videotaped telling supporters that "[M]y job is is not to worry about" 47% of the nation's population because they don't pay taxes and believe they are victims and entitled to a range of government support. He said he would not try to win their votes because "I'll never convince them they should take personal responsibility and care for their lives."  

Most experts agree about 47 percent of Americans don't owe federal income taxes. The nonpartisan Center for Budget and Policy Priorities says about 61 percent of those people work and do pay federal payroll taxes, which fund Social Security and Medicare.

Range of people don't owe federal income tax Range of people don't owe federal income tax

Another 22 percent of people who don't pay income tax are senior citizens, who benefit from higher deductions and Social Security benefits that usually aren't taxed. The remaining 17 percent include students, people with disabilities, the long-term unemployed and wealthier people whose deductions outweigh their tax debts.

About four out of five filers who don't owe federal income tax make less than $30,000 a year.

According to the nonpartisan Tax Foundation, the states with the highest percentage of people who don't owe federal income tax are mostly in the South. Mississippi ranks first, followed by Georgia, Alabama, Florida and Arkansas.

North Carolina ranks 12th on the list, with 37.9 percent of the people who filed federal tax returns in 2010 not owing any federal income tax.

The state ranks high because it has one of the highest unemployment rates in the nation. Also, its poverty rate is higher than the national average and median household income lower than average. That means more households either don't make enough to owe taxes or they're eligible for tax credits and deductions that offset them.

North Carolina's population of seniors also is growing, and the state has a large number of active-duty military members who don't pay federal income tax on their combat pay or living allowances.

Even those who don't pay federal income tax pay taxes in some form, such as sales tax, excise tax on cars and gasoline and property tax.

84 Comments

This story is closed for comments. Comments on WRAL.com news stories are accepted and moderated between the hours of 8 a.m. and 8 p.m. Monday through Friday.

Oldest First
View all
  • bill0 Sep 21, 9:09 a.m.

    ""then it should include 401K's, not just when they are drawn upon, but each year" -MEP"

    You are talking about a tax on value, not a tax on earnings. That is radically different than the feds treat any other investment. Local governments have all sorts of those type of taxes, but the feds don't. It is really an anti-growth strategy if there every was one. You don't just tax growth once, you tax it year, after year, after year. eg your home increasing in value, so the county sends you a bigger tax bill forever. Taxes on value instead of transactions are much more market distorting because true costs are not visible at the time of the transaction.

  • niall Sep 21, 8:55 a.m.

    "then it should include 401K's, not just when they are drawn upon, but each year" -MEP

    So what you're telling is that I shouldn't attempt to save for my own retirement? Do you really understand the consequences of such an activity? That's not going to hit "fat cats" in any meaningful way, but it sure will screw responsible middle class workers and kill the 401K outright.

  • honeybooboochild Sep 21, 8:41 a.m.

    Very happy to announce that at age 54, I have never once in my life filed taxes. Not once monca

    You better work it lady! lol, tell me your secrets. I'm tired of paying so bumpkins can sit around with attitude.

  • Coretta Scott Thing Sep 21, 8:13 a.m.

    Very happy to announce that at age 54, I have never once in my life filed taxes. Not once. Never registered to vote. I work as an international consultant and my funds are wired into offshore banks, no report is ever filed. My home is in someone else's name. My utilities are still in the name of a late relative who lived here before me. The address on my drivers license hasn't been valid in well over a decade and my " legal residence" is in fact a mail drop where the employees have been given generous yearly "tips", so they have my back. The only reason I even maintain a residence here is that I also am the caretaker of an elderly uncle who has made me his sole beneficiary ( and he is a multi-millionaire). Once they die and those funds are sent out of the country, I will leave immediately and wish you all here in the USA a fond fare-thee-well.

  • mep Sep 20, 7:10 p.m.

    mep, it sounds like you're talking about dividends, not capital gains. Capital gains aren't "realized" (emphasis on REAL) until the investment is sold. Dividends are paid monthly or quarterly and in non-retirement accounts are indeed taxed just like wages.

    Yup... I understand... my point was... if we are to tax all income equally... then it should include 401K's, not just when they are drawn upon, but each year. And yup... I understand why it is in our best interest and the govt's interest we save... cause Social Security may not be that secure.

    But I do appreciate BillO's position.

  • storchheim Sep 20, 6:19 p.m.

    mep, it sounds like you're talking about dividends, not capital gains. Capital gains aren't "realized" (emphasis on REAL) until the investment is sold. Dividends are paid monthly or quarterly and in non-retirement accounts are indeed taxed just like wages.

    But remember, these accounts are there for retirement. We were encouraged to save so that we wouldn't be a burden on the system when we could no longer work. If the govt takes some after having agreed not to, they'll end up giving it right back in the form of Medicaid, food stamps, and other cash support programs for people whose retirement savings they seized.

  • mep Sep 20, 5:35 p.m.

    401k withdrawals are taxed as ordinary income no matter what the underlying investment was.

    I'm saying annualized... you know, each year even when your NOT drawing from it? All income taxed the same your saying. THAT would be income.

    Assets used to offset losses or gains (capital or otherwise)... again, should every transaction be taxed accordingly? Regardless of its source?

    so inflationary increase in prices doesn't trigger a big tax bill. Without it, no retiree could afford to downsize homes.
    bill0

    Again... why the limits? If I sell my home, or have any other capital gains... your saying they should be taxed as regular income IF indeed you want to be fair.

    And what about inheritance tax? What if I have the audacity to die and happen to leave something for my kids? Regular income? If not why? Seems the govt wants 50% if it happens to catch their eye at a "certain level".

    Flat fair sales tax.... no individual income tax. Period.

  • bill0 Sep 20, 4:30 p.m.

    "401K tax rates? Should they also be taxes the same as regular income? " What about interest on the 401K each year as dividends?
    "

    You should read up on this stuff before you form your opinion. 401k withdrawals are taxed as ordinary income no matter what the underlying investment was.

    "What about sell your car? Income tax? Sell your TV, or dog? Income tax?"

    Again, read up on how taxes are calculated. The cost basis of the asset is used to calculate taxable gains. Unless your car is a collectable that goes up in value, no taxes are due at any rate.

    "It already is a capital gain over certain levels. Certain levels seems a bit discriminatory. Why not the same for everyone? Again... fair. "

    This isn't a class warfare type limit. It's just in place so that your run of the mill inflationary increase in prices doesn't trigger a big tax bill. Without it, no retiree could afford to downsize homes.

  • WolfPackAlum Sep 20, 4:23 p.m.

    >>"All I know is I need to find out how to get into that non-paying percentage."

    Here are step-by-step instructions on how to reduce your tax rate to zero for $150K in gross income :

    Link to WSJ article: http://tinyurl.com/3w5oqek

  • ger Sep 20, 4:16 p.m.

    (CNN) – Clint Eastwood isn't taking much time to reflect on his unique endorsement of Republican presidential candidate Mitt Romney at last month's Republican National Convention, after all he says if they're "dumb enough" to ask him, they'll take what they get.

    priceless

More...