I suspect that when Mitt Romney made his remark about the 47% of
Americans who don’t pay income tax and won’t take personal
responsibility, he was thinking about the mythical welfare queen staying
at home collecting government benefits, although you’d think that a
numbers guy would realize that slackers on the dole could only be a
fraction of the giant swath of America that he’d dismissed. As many
have pointed out, those who don’t pay income tax include most retirees
who rely primarily on Social Security and a large group of working age
people who pay significant Social Security and Medicare payroll taxes
(as well as state and local taxes).
It also includes more than half a million farmers, who would seem to epitomize hard work and personal responsibility. (Yes, farmers receive various subsidies, but those are concentrated on a handful of crops according to Brian Riedl of the Heritage Institution. Two-thirds of agricultural output, including fruits, vegetables, livestock, and poultry “receive nearly nothing.”)
All told, based on data from 2007 income tax returns, 563,000 tax returns reporting farm income owed no income tax after credits. That is 28% of such returns. It is probably an underestimate because it excludes farmers whose incomes are so low that they don’t have to file a tax return. (The 47% figure includes households who do not file tax returns.)
How do so many farmers avoid income tax? In part, it is because farming qualifies for some special tax treatment. The Joint Committee on Taxation lists seven agricultural tax expenditures, but they are comparatively small, totaling just $2.6 billion over five years. Small businesses also qualify for various tax breaks, such as the ability to immediately deduct many equipment purchases. (Larger enterprises must spread the deductions over several years.) But my guess is that most of the farmers who escape income tax do it because they just don’t earn that much money. Despite working really hard.
Read more: http://www.forbes.com/sites/leonardburman/2012/10/02/more-than-half-a-million-farmers-didnt-pay-income-tax-in-2007/
It also includes more than half a million farmers, who would seem to epitomize hard work and personal responsibility. (Yes, farmers receive various subsidies, but those are concentrated on a handful of crops according to Brian Riedl of the Heritage Institution. Two-thirds of agricultural output, including fruits, vegetables, livestock, and poultry “receive nearly nothing.”)
All told, based on data from 2007 income tax returns, 563,000 tax returns reporting farm income owed no income tax after credits. That is 28% of such returns. It is probably an underestimate because it excludes farmers whose incomes are so low that they don’t have to file a tax return. (The 47% figure includes households who do not file tax returns.)
How do so many farmers avoid income tax? In part, it is because farming qualifies for some special tax treatment. The Joint Committee on Taxation lists seven agricultural tax expenditures, but they are comparatively small, totaling just $2.6 billion over five years. Small businesses also qualify for various tax breaks, such as the ability to immediately deduct many equipment purchases. (Larger enterprises must spread the deductions over several years.) But my guess is that most of the farmers who escape income tax do it because they just don’t earn that much money. Despite working really hard.
Read more: http://www.forbes.com/sites/leonardburman/2012/10/02/more-than-half-a-million-farmers-didnt-pay-income-tax-in-2007/
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