This is from CNS News:
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.”
“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,” said the CBO study.
“In its analysis, CBO measured individual income taxes net of refundable credits,” it said.
In 2010, the CBO determined, American households in the bottom 40 percent paid negative amounts in income-tax dollars and a negative average income-tax rate.
“Much of the progressivity of the federal tax system derives from the individual income tax,” said the report. “In 2010, the lowest quintile’s average rate for the individual income tax was -9.2 percent and the second income quintile’s rate was -2.3 percent.
“A group can have a negative income tax rate if its refundable tax credits exceed the income tax otherwise owed,” said the CBO report. ...
