Talk About Inequality! Top 40% Pay 106% Of Income Taxes

We keep hearing about inequality, but you don’t hear much about the inequality when it comes to taxation. CNS News has the latest from the CBO finding that the top 40% of Americans pay a little more than 106% of income taxes in America. The bottom 40% pay a negative 9% thanks to government transfers, or wealth redistribution. How is that fair or equal?

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.

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Most of the people in the top 40% are not anywhere near being in the top 10% and never will be. One of the things that keeps so many from becoming wealthy is the income tax itself, as Rush Limbaugh pointed out on his show today.

It may be the single biggest obstacle, because the income tax takes from the your disposable income.  The income tax, by virtue of its existence, practically assures that people will not get wealthy via income.  Yet that’s how most people get their money is via income — as opposed to people who are born to it and inherit it, who have wealth but not through income.  Ordinary income is the income associated with work, a tax return, ordinary income.

There’s other kinds of income, the income from investments, and they’re not taxed at the rate that income is.  “Capital gains” it’s called and the tax rate on capital gains is even now lower than it is on income.  Now, Obama wants to raise it just to be “fair,” he says. But the income tax is one of the biggest impediments, and raising income taxes — while portrayed as something compassionate, good, and decent for all — is actually an impediment, and it is a government’s way of keeping people where they are economically.  (Read More)

It’s also the government’s way of moving people down the economic ladder.

Speaking of keeping people where they are economically, read the incredibly sad tale of a young New York City girl named Dasani, her six siblings and her extremely dysfunctional parents. For years they lived in absolute squalor in a hell hole that I wouldn’t wish on my worst enemy. The article was in the NYT, so other than a few mentions of the parents being totally irresponsible, the plight of this family is passed off as being entirely the fault of Republicans and budget cuts. It was mentioned that the grandmother had cleaned up her own act years earlier after welfare reform, but not until it was too late for her daughter, Dasani’s mom. The family’s income comes from government. They did manage to live in a home for while after the grandmother died leaving them $50,000, but they blew through that in short order. Things were looking up when they were provided with upgraded living conditions by their fellow citizens. But who knows where they’ll be in one, five or ten years.

You can’t read the story and not feel bad for the family, especially the kids. But it isn’t the lack of welfare funding that caused their plight. Both parents have a history of drug abuse. They had seven children they couldn’t afford, plus at least a couple more the husband had that don’t live with them. They have no work ethic. The father apparently is a barber, but he doesn’t spend much time working. The mother thought about getting a job briefly, but mention of the need for a GED changed her mind.

Like I said, it’s a sad story, and there are millions more just like it all across the United States. The problem isn’t that the top 40%, the top 20% or the top 10% aren’t paying enough in taxes.