Are the Top 1% Really Getting Off Scot Free? Let’s Look Again…
The American Enterprise Institute and the Congressional Budget Office (CBO) have issued their latest report on income and taxes, and it offers an interesting response to that often-asked Liberal question: Why aren’t the wealthy paying their fair share?” In the video above, IJReview writer Michael Hausman analyzes the data.
The CBO report, entitled “The Distribution of Household Income and Federal Taxes” analyzed data current through 2011. The report looked at:
(Each) American household’s: a) average “market income” (a comprehensive measure that includes labor income, business income, and income from capital gains), b) average household transfer payments (payments and benefits from federal, state and local governments including Social Security, Medicare and unemployment insurance), and c) average federal taxes paid by households (including income, payroll, corporate, and excise taxes).
According to the latest figures, the top 1 percent of households earned 15 percent of the income in the country. Yes, that’s a lot. However, the same people actually paid 35 percent of all federal income taxes.
The top 20 percent of households earned 52 percent of total personal income. Again, that is a generous slice of the pie. But that 20 percent paid 69 percent of federal income taxes.
The bottom 20 percent of households earned only 9 percent of all personal income in America, but they only paid 1.9 percent of all taxes paid.
Taxes paid by that bottom 20 percent of households have actually fallen since 1984, from 9 percent to the current low.
Here’s a surprising statistic: 40 percent of all households in the United States get more than half their income from federal transfer programs, meaning they were largely supported by the higher earning groups. And when those government transfer amounts are factored in, 60 percent of people in the United States actually had negative rates. So they got more money from the government than they paid in taxes.
Looking at these numbers from another viewpoint, we can see the top 20 percent of households paid in an average $46,500 in taxes. This amount is the highest in both dollars paid and percentage of gross personal income tax paid by Americans.
In other words, only the top 20 percent paid a substantial amount in income taxes. Essentially, they took up the slack for everyone else.