Why Washington’S Fiscal Math Doesn’T Work: 60% Of Households Get More Benefits Than They Pay In Taxes

[interestrateripoff]

http://davidstockmanscontracorner.com/why-washingtons-fiscal-math-doesnt-work-60-of-households-get-more-benefits-than-they-pay-in-taxes/

The Congressional Budget Office (CBO) just released its annual report on “The Distribution of Household Income and Federal Taxes” analyzing data through 2011 on American household’s: a) average “market income” (a comprehensive measure that includes labor income, business income, and income from capital gains), average household transfer payments (payments and benefits from federal, state and local governments including Social Security, Medicare and unemployment insurance), and c) average federal taxes paid by households (including income, payroll, corporate, and excise taxes).

Some of the key findings of the CBO analysis are displayed in the table above, with the data organized by household income quintiles. The data in the first five rows above appear in the CBO report (from Tables 1 and 4), and rows 6-8 above have been calculated separately based on data from the first four rows in the table…..

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 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.

What isn't mentioned in this article is the fact how would the bottom 60% consume without this wealth transfer? Would the rich like the decline in consumption in exchange for the reduced wealth transfer? You can't have it both ways.

[XswampyX]

It's just protection money, paid by the government to us, so we don't hang them all.

If I was a billionaire (who didn't pay my taxes), I wouldn't object.

Edit to add :-

It's a bit like complaining that my donkey eats a lot more hay than me, so is in fact a liability and should be culled. If I cull my donkey then I will have to do some work. Eeek!

Edited November 18, 2014 by XswampyX

[MarkG]

What isn't mentioned in this article is the fact how would the bottom 60% consume without this wealth transfer? Would the rich like the decline in consumption in exchange for the reduced wealth transfer? You can't have it both ways.

There is rarely a benefit to giving money to someone so they can give it back to you after the government takes a cut along the way. What welfare really does is take money from the poor and middle class, and gives it to the poor and the middle class government employees, so they can give it to the rich.

Edited November 19, 2014 by MarkG