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.