CNS News reports on a new study by the Congressional Budget Office (CBO).
The top 40 percent of households by before-tax income actually paid 106.2 percent of the nation’s net income taxes in 2010, according to a new study by the Congressional Budget Office.
At the same time, households in the bottom 40 percent took in an average of $18,950 in what the CBO called “government transfers” in 2010.
Taxpayers in the top 40 percent of households were able to pay more than 100 percent of net federal income taxes in 2010 because Americans in the bottom 40 percent actually paid negative income taxes, according to the CBO study entitled, “The Distribution of Household Income and Federal Taxes, 2010.”
[...]When the the negative 9.1 percent in federal income taxes paid by those in the bottom 40 percent is subtracted from the 109.1 percent paid by those in the top 60 percent, federal tax revenues net out to an even 100 percent.
[...]The households in the bottom 40 percent of income—which on average paid negative federal income taxes—were on average receiving many thousands of dollars in what the report calls “government transfers.” These transfers included, among other things, benefits from unemployment insurance, Medicare and Social Security, as well as from means-tested programs such as the Supplemental Nutrition Assistance Program (food stamps), and Medicaid.
“Government transfers increase income in all groups, but those increases, both in dollars and as a percentage of market income, are larger for groups with lower market income,” says the report.
According to the CBO, households in the bottom quintile received an average of $22,700 in government transfers in 2010 (including $14,300 in payments from Medicare and Social Security and $8,500 in payments from other government programs); and households in the second quintile received an average of $15,200 in government transfers (including $10,300 in payments from Medicare and Social Security and $4,900 from other government programs).
Now I have been reading articles like this one in National Review by James Pethokoukis, which talk about Obama’s rhetoric about “income inequality”. And I think that when the President goes on a rant about how much he wants to fix “income inequality”, you have to keep in mind what he is actually fixing. He thinks the people who earn the most need to be taxed more and he thinks that the people who earn the least need to be given more benefits. That’s what he is trying to fix.