CBO: Rich Lose Most in Recession, Taxes

• July 10, 2012 3:58 pm


Top income earners have been hardest hit by the recession and taxes, according to the Congressional Budget Office.

A CBO study found that middle class earners lost about 5 percent of their pre-tax income between 2007 and 2009, compared to 2 percent losses for low-income workers and 36 percent declines among the top 1 percent. The study counted government aid, such as welfare, unemployment insurance, and Social Security as income.

President Barack Obama included some tax relief in his Stimulus bill, which reduced the tax burden of low and middle class earners to the lowest levels in decades, while federal tax rates on the top 1 percent increased by .8 percent. This has led to a more progressive distribution of wealth. The top 20 percent of workers earn approximately 50 percent of all pre-tax income, despite its sharp decline in income, but cover about 70 percent of the nation’s tax bill, according to the CBO.

Obama has similar plans going forward. On Monday he proposed a one-year extension on the Bush tax cuts for those earning less than $250,000, while raising taxes on small businesses and high-income earners by nearly 5 percent.

"The fate of the tax cut for the wealthiest Americans will be decided by the outcome of the next election," said Obama during a speech Monday advocating for his tax plan. "My opponent will fight to keep them in place. I will fight to end them."

House Republicans and GOP nominee Mitt Romney support making the tax cuts permanent across the board.


Published under: CBO, Obama Economy, Taxes