Some additional analysis and commentary will be provided here that reveal a yet-to-be discussed major implication of the CBO report – almost the entire burden: a) of all transfer payments made to American households and b) of all non-financed government spending, falls on just one group of Americans – the top one-fifth of US households by income. That’s correct, the CBO study shows that the bottom three income quintiles representing 60% of US households are ‘net recipients’ (they receive more in transfer payments than they pay in federal taxes), the second-highest income quintile pays just slightly more in federal taxes ($14,800) than it receives in government transfer payments ($14,100), while the top 20% of American ‘net payer’ households finance 100% of the transfer payments to the bottom 60%, as well as almost 100% of the tax revenue collected to run the federal government. Here are the details of that analysis.
Well, what do you know? It turns out that not only was Romney’s infamous 47% remark correct in substance, he actually underestimated. And this CBO analysis extends beyond the impact of federal income tax payments and credits. Federal taxes paid here includes average taxes paid by households (including income, payroll, corporate, and excise taxes). The top 20% are pulling the cart, essentially alone.