Who pays taxes?

Is it true that nearly half of households pay no taxes? N.C. State University economist Mike Walden answers.

“Well, you really have to pay attention when that number’s thrown out as to what taxes are being talked about. The true statistic is that 46 percent of households pay no federal income taxes — federal income taxes, not all taxes. So we need to qualify it on that basis.

“Now if you look at those folks, those households who do not pay federal income taxes, do they pay other taxes?  Well, sure they do. If they work, they’re going to pay payroll taxes unless they’re retired. If they buy things — go to a store and buy things — those folks are going to pay sales taxes if your state does have a sales tax, like North Carolina has.

“If those households own property, own their home, own a vehicle, they’re going to pay property taxes. Now even if they don’t own a home — if they rent — they probably indirectly pay property taxes because the landlord is going to attach some part of his or her property taxes to the rent.

“And then finally you could argue that many business taxes, like the corporate income tax, there’s research to show that some of that tax actually gets passed on to consumers in terms of higher prices. So, yes there are a significant number of folks who do not pay federal income taxes, but they certainly do pay other kinds of taxes.”

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