Your parents probably told you that you can’t get something for nothing. But your government is sending a very different message. For now, at least. The non-partisan Tax Policy Center recently released a report finding that almost half (47 percent) of American households will pay no income taxes this year. Many, in fact, will actually come out ahead in their dealings with the government, because they qualify for refundable tax breaks such as the earned income tax credit.
This probably explains a Gallup poll from April which found that 48 percent of Americans said the amount they pay in federal income taxes is “about right.” Even the polling company was surprised by its findings. “Since 1956, there has been only one other time when a higher percentage of Americans said their taxes were about right -- in 2003, when 50 percent did so after two rounds of tax cuts under the Bush administration,” Gallup wrote.
But the finding makes sense. If you’re paying nothing, that probably does seem like a good deal. Even if it isn’t either fair or sustainable.
The federal government is trillions of dollars in the red. Yet as the percentage of taxpayers has dropped, the pace of federal spending has increased. Median household income has increased by a third since 1970. But federal spending has soared by 221 percent in that same timeframe -- almost nine times faster.
When government gives people cash and programs that cost more than they pay in taxes, most of them will favor ever bigger spending and more government. Who doesn’t love a “free lunch”? And, having had one today, who wouldn’t want one tomorrow, next month -- indeed, every day?
People bagging bargain-basement benefits will vote for candidates who promise even more extravagant “gifts”: more spending on education, more on roads, more on health care. And if the candidates promise to “tax the rich” to pay for all these benefits, so much the better, right? But, like the fabled goose that lays gold eggs, “the rich” are already doing more than their part.
Economist Curtis Dubay of The Heritage Foundation ran the numbers earlier this year. He found that in 2006, the top 20 percent of earners made 55.7 percent of all pre-tax income, up slightly from 54.8 percent in the year 2000. Yet at the same time, their share of federal income taxes increased from 81.2 percent to 86.3 percent.