New CBO Report Explodes Tax Fairness Myths

By JOHN MERLINE

Posted 11/13/2014 05:53 PM ET

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President Obama has constantly complained about the rich not paying their "fair share." But a new Congressional Budget Office report shows that the rich were paying more than their fair share of taxes before the numerous hikes he imposed.

The CBO looks at the distribution of household income and federal taxes up through 2011, the last year for which it has data. It found, for example, that:

While the top 1% of households accounted for 15% of all income, they paid 35% of all federal income taxes. The bottom 20% accounted for 5.3% of income, but they got more in refundable tax credits, on average, than they paid in income taxes.

Even when you include payroll and other federal taxes, the bottom 20% carried just 0.6% of the total tax burden.

Overall federal tax rates on the top 1% have averaged around 30% for more thaFn three decades, but the rate paid by the bottom 20% has dropped steadily, going from 9% in 1984 to 1.9% in 2011.

Despite all the hullabaloo about how Bush's tax cuts favored the rich, the share of income taxes paid by the top 1% climbed from 22% in Bush's first year in office to 25% by 2008. The share paid by the bottom group dropped from 1.4% to 0.4%.

Yet somehow, mainstream news outlets like the Washington Post manage to report with a straight face that, thanks to Obama's tax hikes, "the very richest Americans are finally shelling out a bit more in federal taxes."

The country is also extremely generous when it comes to writing checks to lower income families. So much so, in fact, that the bottom 40% of households — 48.6 million of them — now get more than half their income in the form of transfer payments, the CBO report shows.

Oddly, when it comes to fairness, Obama and his fellow Democrats are completely silent on the fact that the rich actually collect hundreds of billions in federal transfer payments each year, and not just from Social Security and Medicare.

According to data tables accompanying the CBO report, the wealthiest 20% of households received a total of $284 billion — with a "b" — in transfer payments in 2011. The average family in this group collected $6,050 from Social Security, or $500 more than poorest 20% of households received.

They also got $3,000 in Medicare benefits — almost the exact same amount as the poorest households.

It's true that both Social Security and Medicare were designed to provide benefits regardless of income, but the richest 20% also collected an average $594 in Medicaid, the health care program for the poor, and another $1,300 in cash and in-kind benefits from the federal government.

Even the richest of the rich get plenty of money from Uncle Sam, with the top 1% receiving a total of $11.7 billion in 2011. Most of it comes from Social Security and Medicare, but even this elite group managed to get $1,000 worth of Medicaid, cash and in-kind benefits.

Yet despite their being caricatured as pawns of the rich, it has been Republicans who've pushed to limit or cut off access to these benefit programs to wealthy Americans — particularly Social Security and Medicare — while Democrats defend such payments on the grounds that "means testing" would undermine political support for them.

Apparently fairness is also in the eyes of the beholder.