Taxes Are Paid By High Income Earners. Highest Bracket Pays Seven Of Ten Tax Dollars.

CBO Report: Top 40 Percent of Wage Earners Pay 106 Percent of Taxes

Thursday, 12 Dec 2013 08:23 AM

By Dan Weil

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A statistic deep inside a new Congressional Budget Office (CBO) report may further inflame the debate over income inequality.

The report says that the top 40 percent of U.S. wage earners paid 106 percent of U.S. individual income taxes in 2010, while the bottom 40 percent paid negative 9 percent,CNBC reports.

The figure exceeds 100 percent for the top taxpayers because of the sub-zero amount for the bottom taxpayers.


And how do you pay less than zero taxes? The CBO total subtracts "refundable tax credits" from taxes paid. That includes government transfers such as Social Security and food stamp payments.

Looking at it by brackets, the top bracket accounted for 69 percent of all personal income taxes, while the bottom bracket contributed 0.4 percent.

"For most income groups, average federal tax rates in 2010 were near the lowest rates for the 1979-2010 period," the report says. "The exception was households in the top 1 percent, whose average federal tax rate in 2010 was significantly above its low in the mid-1980s."

Since 2010, taxes have risen for everyone, with the biggest increases hitting the most wealthy, the CBO says.

Meanwhile, as governments around the world seek to shrink their massive debt burdens, the call is rising for higher taxes on the wealthy, says Romain Hatchuel, managing partner of Square Advisors, a New York-based asset management firm.

"Households from the United States to Europe and Japan may soon face fiscal shocks worse than any market crash," he writes in The Wall Street Journal.



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