Retirees And Students Often Don't Pay Income Taxes

Moneybox
A blog about business and economics.
Sept. 17 2012 8:42 PM

Retirees And Students Often Don't Pay Income Taxes

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Justin Wolfers brought this Hamilton Project chart to my attention and it does a great job of illustrating what I was trying to say here, namely that non-payment of federal income taxes is largely a life-cycle issue.

Out on the right tail we see that retired people often have neither income nor payroll tax liability because they have no jobs. Then on the left side of the curve we see that young people are often not paying income taxes—presumably because part time gigs leave you with a very low annual income. Common sense says this isn't about living large on welfare checks, it's about being in school. As a demographic fact about American life, at any given point in time a pretty large share of people aren't employed full-time. But over the course of a lifetime almost everyone is going to pay some taxes on their income.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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