Every American knows something about paying taxes, but most Americans know little about tax debt….
Every American knows something about paying taxes, but most Americans know little about tax debt.
While credit card debt and student loans tend to grab headlines, the Internal Revenue Service estimates that Americans owe $441 billion in tax debt, making it a massive problem that is vastly overlooked.
A survey by personal finance website GOBankingRates and Solvable asked 21,404 Americans about their tax debt — including how much tax debt they owed, their income bracket, age, gender, profession and state of residence.
The survey found that only 8% of Americans with tax debt make $125,000 or more: the lowest percentage of any income bracket.
The Make Billionaires Pay Act, a new bill introduced by Sen. Bernie Sanders could change that; if passed it would impose a 60% tax on the wealth that billionaires have accumulated since the pandemic broke.
Since there is no exact report on cumulative tax debt from state-based taxes, Solvable conservatively estimates that figure to be roughly around $146 billion, which was found by extrapolating California’s reported 2018 tax gap figure that was between $20 billion and $25 billion compared to the rest of the U.S.
Beauty professionals in Utah represented a higher percentage of cases, coming in at 10% compared to only 4% nationally.
New Mexico was one of the states with the highest percentage (9%) of military personnel carrying tax debt, compared to 2% nationally.
People over the age of 76 were most likely to fall into tax debt in North Dakota than any other state, with 25% of all cases reported. Nationally, those over the age of 76 made up 7% of all cases.
In Idaho, there were no cases of tax debt for anyone under the age of 40.
Overall, the original report shows that tax debt affects every profession, generation and income bracket for widely varying reasons.