Congressional Budget Office stuns! ‘Rich’ pay 106% of income taxes

NEW YORK – A new Congressional Budget Office study has torn in hole in yet another one of President Obama’s insistent claims about the way things are.

The Congressional Budget Office study, “The Distribution of Household Income and Federal Taxes, 2010, ” shows that the top 40 percent of households, based on pre-tax income, paid a remarkable 106.2 percent of the nation’s income tax in 2010. Meanwhile, households in the bottom 40 percent paid “negative income tax,” receiving an average of $18,950 in government transfer payments while paying no federal income tax.

The poor in America not only pay no income tax, they receive various government payments drawn from income tax revenues paid by the so-called “rich”

The CBO determined that in 2010, the lowest income quintile of taxpayers in America paid an individual income tax rate of -9.2 percent, while the second lowest income quintile paid -2.3 percent.

Why the poor pay ‘negative income tax’

The CBO explained that a group of U.S. taxpayers was considered to have a “negative income tax rate” when refundable tax credits, in terms of government transfer-payments to the group, exceeded the income tax the group would otherwise earn.

This produces the disparity in which the higher-income groups of taxpayers end up paying more than 100 percent of all income tax paid, as a result of needing to generate from income tax revenues the tax credit transfer payments the government “owes” lower income Americans.

“Because the federal tax system is progressive – average rates rise with income – shares of taxes paid exceed shares of income for the highest income group, and the opposite holds true for the bottom four quintiles,” the CBO explained.

Included in the government transfer payments paid disproportionately to lower income groups are the following: Social Security and Medicare payments, as well as other government benefits paid from the Supplemental Nutrition Assistance Program, or SNAP, generally known as “food stamps”; benefits from the Children’s Health Insurance Program; and various “earned income tax credits” calculated for lower-income wage earners.

“Social Security and Medicare go predominately to elderly households, many of which have low market income,” the CBO explained.
Read more at http://www.wnd.com/2013/12/cbo-stuns-rich-pay-106-of-income-taxes/#eLPGvFrmpxKQZO9P.99

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