Punishing the producers: top 40% of households paid 106.2% of 2010 net income taxes

Way before President Obama lied about healthcare, he had another whopper back in 2008: “We’re going to give 95 percent of Americans a tax cut.” Well, that sounded very nice but it’s far from the truth. You can’t give 95 percent a tax cut when you have close to 40 percent not paying taxes and instead receiving a credit.

As a matter of fact, according to a Congressional Budget Office study, as reported by CNS News, households in the bottom 40 percent of before-tax income ($41,000 and less) received an average of $18,950 in what the CBO called “government transfers” in 2010. However, the top 40 percent of households by before-tax income ($80,600 and up) actually paid 106.2 percent of the nation’s net income taxes.

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.”

How is that possible? According to the CBO:

When refundable tax credits, such as the earned income tax credit and the child tax credit, exceed the other federal tax liabilities of the households in an income group, those households are said to have a negative average tax rate. A group can have a negative income tax rate if its refundable tax credits exceed the income tax otherwise owed.

Households in the bottom 40 percent of income — which on average paid negative federal income taxes — were on average receiving many thousands of dollars in what the report terms “government transfers” from things like unemployment insurance, Medicare and Social Security, as well as from means-tested programs such as the Supplemental Nutrition Assistance Program (food stamps), and Medicaid.

In fact, households in the bottom 40 percent received a combined average of $18,950 in government transfers in 2010.

So when President Obama talks about fairness, fair share, economic equality, economic justice – there’s already a huge amount of wealth redistribution occurring in America. But he wants more. Obama clearly expressed his concept of economics to Joe the Plumber, “I think we all benefit when we spread the wealth around.” Yep, just like manure.

Well, I have a better quote for President Obama, from the late Baroness Margaret Thatcher (who he conveniently ignored on her passing): “The problem with socialism is that you eventually run out of other people’s money.” That day of reckoning is coming.


  1. I would like to see those figures without social securities lumped in. That money was mine to begin with and should not be included.

  2. There will never be a fix for this without eliminating the existing progressive tax system. It is essentially back door socialist redistribution. The left scream fair share, but a flat rate would still have the highest earners paying more based on an equal percentage. In addition, they would still spend and reinvest more as they would still be making purchases of stocks or products thus adding to the job base and product demand. The real problem is people who draw back more in credits than was ever withheld. So long as you tell people that they cannot succeed they won’t. More over the more you encourage people with “free money” to not be productive, they won’t be. Even though the math on this doesn’t move them forward, the perception for them is that it is. Slavery through dependency is what this is.

  3. Its true. I’ve told B several times, but he wont listen. Something about “the greater good” and his plans for going back to Chicago.

  4. First all of our manufacturing was given away to China for cheaper labor. Next put those who demand a higher wage on welfare and let in millions of illegals from south of the border take whatever labor jobs are left. Next comes Barack Obama who doubles down on the decades steady flow of things.

  5. I do not admire Mr. Obama. He is incompetent. I knew and said that in 2008. I am conservative, at least in terms of economic policy. My daddy raised me to be an Eisenhower Republican, although today I dislike most Republicans and Democrats equally. I admire Mr. West, who generally speaks the truth as I understand it from my two business degrees in undergrad and grad school back in the 1970s. However, with all that said, there is a flaw in this argument. It isn’t right to consider Social Security, Medicare and unemployment insurance as government transfer payments. These programs are actuarially designed insurance. One does not collect Social Security unless one works and pays into the system for a minimum amount of time. Same for Medicare. I will grant you, they favor the low income, but they are nevertheless “my money” paying for “my benefit.”
    It is no more proper to consider Social Security a government transfer than it is to consider a private annuity I purchased as a transfer payment. I spent my own taxed money to buy the private annuity; I spent my own taxed money to buy the Social Security annuity.
    Food stamps and Medicaid, two others cited, are government transfers, funded by and coming from the government’s general income tax fund.
    Perhaps someone in Mr. West’s office would like to recalculate?

  6. dear mr west, having seen just a few videos of yours one thing shines through: you know your stuff an then some. i have never before seen a politician with such detailed factual knowledge. impressive and very, very convincing!

  7. Ever since obama became POTUS we’ve paid…and I’m not necessarily just talking about taxes…What kind of person votes for a guy like obama anyways?? Must’ve taken a special kind…

  8. You want to see the Debt go bye-bye? Simple.

    Take your bonds back to the Treasury, say thank you but no thank you, and walk away. They take the bonds back and retire them…without needing to compensate you, and that part of the debt could be retired, and brought down to more “managable levels”

    But I know you won’t do that.

    See….you want to make more money…and you want to do it TAX FREE, right?

    Alright: here’s ONE WAY to go about doing it.

    Make the Government construct a lending program, that markets to Federal Bondholders like YOU…offers terms in a LENDING CONTRACT, to purchase a TREASURY CERTIFICATE on claim in your name, that Government puts on deposit with the Federal Reserve, that monetarily stands FIVE TIMES BIGGER than what you’re holding in PROMISES that you purchased from the Government.

    That’s right…a LENDING ARRANGEMENT to get a bigger financial instrument, that when used as intended, makes MORE MONEY FOR YOU….than what the TAXMAN can bite out of your wallet.

    And here’s what’s even MORE CRAZY…

    You put your bonds as DOWNPAYMENT upon the loan

    Details to follow


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