Counting transfer payments such as foods stamps, Medicaid, Medicare, and other government welfare, Congressional Budget Office (CBO) analysis shows the top 40% pay 106% of all taxes (more than all of them). In turn the bottom 60% get money back.
Please consider The rich do not pay the most taxes, they pay ALL the taxes by CNBC reporter Jane Wells.
Buried inside a Congressional Budget Office report this week was this nugget: when it comes to individual income taxes, the top 40 percent of wage earners in America pay 106 percent of the taxes. The bottom 40 percent...pay negative 9 percent.
The key table is in Box 1 on PDF page 11 (report page 7) of Distribution of Household Income and Taxes. The report was released in December 2013 but data is for 2010.
Highlighting is mine.
- The bottom 20% had average income of $8,100 but received $22,700 in annual assistance, netting $30,800 in after-tax income.
- The second quintile had average income of $30,700 but received $15,200 in annual assistance, netting $43,400 in after-tax income.
- The middle quintile received a bit more than they paid out, with $2,600 in annual assistance to be precise.
That money had to come from somewhere, and it did.
- The highest quintile paid $52,500 more in taxes each year than they got back.
- The second-highest quintile paid $8,800 more in taxes each than they got back.
Wells concludes ...
Fair or not, I will let you be the judge. People who make more should pay more, generally speaking. In America, they are. Yes, the rich (and almost rich) are getting richer. When it comes to individual income taxes, they're also covering the entire bill. And leaving a tip.
Reflections on the "Almost Rich"
I would be hard-pressed to call the fourth quintile "almost rich". And I rather doubt they are getting much, if any richer, inflation-adjusted.
The benefits to this recovery are concentrated in the top 10%, with most of that in the top 1%. Thank the Fed for that outcome.
For further discussion, please see ...
- Top 1% Received 121% of Income Gains During the Recovery, Bottom 99% Lose .4%; How, Why, Solutions
- Reader Asks Me to Prove "Inflation Benefits the Wealthy" (At the Expense of Everyone Else)
Regardless of who you think is to blame for rising income inequality, the report sheds a great deal of light on where tax dollars are coming from, and where they go.
Fair is in the eyes of the beholder.
Mike "Mish" Shedlock