November 10, 2012

Well Across the Rubicon

Yesterday I promised evidence that America has crossed "a rubicon of takers versus makers." Prior analysis I'd seen placed that number at 48 percent but yesterday, on the excellent website of the Tax Foundation, a non-partisan tax research group based in Washington, D.C since 1937, I discovered an article summarizing the findings of their Fiscal Incidence analysis of U.S. Federal taxes and spending. It was published September 21, 2009.

New analysis from the Tax Foundation's Fiscal Incidence project fills this void and puts hard numbers on the current amount of redistribution and how much the Obama administration's policies will affect that. Currently, the majority of American families receive more in government spending than they pay in taxes, with roughly $826 billion being redistributed from the top 40 percent of families to the bottom 60 percent.

Sixty percent takers (net) - forty percent makers (net)

That was before Obama's policies took effect. The effect of those policies, two years later, is higher tax collections from the top 5 percent only. The other 95 get, at least in the aggregate, more transfer payment than tax increase.

In 2012, after all of Obama's policies are in place, the amount redistributed from the top 5 percent of families will grow in real terms to $770 billion, a 34 percent increase over current levels. Every other income group will benefit from the increased amount taken from the top 5 percent of families and the group of families who, on average, get more back in spending than they pay in taxes will jump to 70 percent of all families.

Seventy percent takers (net) - thirty percent makers (net)

Redistribution is ultimately at the heart of all tax and spending debates in Washington. But lawmakers are doing the public a great disservice if they fail to talk in honest terms about who currently pays for government programs and services, who benefits, and how new policies will change that balance.

Don't Demand the Unearned Posted by JohnGalt at November 10, 2012 9:42 AM

Hence a discouragement that exceeds the sadness of an election lost. By the next presidential election, 50 - 100 million Americans will be dependent on the government for health care and susceptible to demagoguery and scare tactics.

I will provide some anecdotal sunshine. At a departmental dinner last evening, I was seated next to a co-worker I assumed to be an Obamabot. She let slip that she voted for Gary Johnson and was thinking about joining the big Ls.

I gave her the "Libertario Delenda Est" speech -- I'm nothing if not fair. But I was heartened that this "lifelong Democrat" sees the injury of redistribution (husband owns a small business and voted Romney).


Posted by: jk at November 10, 2012 11:06 AM | What do you think? [1]