The U.S. tax code is "absolutely broken" and the only way to fix it is to spread the burden to lower-and middle-income earners, Scott Hodge, president of the Tax Foundation, told CNBC Thursday.
"The United States leans more heavily on the top 10 percent of earners than any other country on Earth and our poor people actually have the lowest income tax burden of any industrialized country," he said.
According to Internal Revenue Service data, the top 25 percent of earners paid 86.3 percent of federal income taxes while the bottom 50 percent paid 2.7 percent of taxes. Those in the middle paid 11 percent of taxes.
"We need to broaden the tax base," Hodge said. "I hate to say this because no one’s going to like this in Washington but we need to bring many of those people who no longer pay any income tax back on the tax rolls."
He said compromise on both sides is needed for an overhaul after years of policies to help the middle class "actually knocked millions of people off the tax rolls," he said. He noted that according to Congress’ Joint Committee on Taxation, nearly 51 percent of all American households pay no income taxes.
He thinks an effort to overhaul the tax system, including removing many tax breaks, is "very very close, two years away." Without an overhaul "we’re in a financial death spiral," he said. "We have to bring the cost down to everyone. Everyone has to share in the cost of government."