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.