WASHINGTON, D.C. – The Welfare State is alive an well, it seems. Even with Republican majorities in congress, and a bare-knuckle brawling Republican in the White House, there remains a lot of work to do to tackle the immoral government-coerced redistribution of wealth. While tax cuts are welcome, and the slashing of regulatory regimes is a blessing, we should also be clamoring for a REAL reduction in spending and forced transfers of wealth from those who have to those who have less.
“According to a report released this year by the Congressional Budget Office, only the top two income quintiles in the United States pay more in taxes than they receive in government transfers.
Not surprisingly, the lowest income quintiles receive far more in transfers than they pay in taxes:
In the lowest quintile, households pay only $400 in taxes (as of 2014, the most recent data available) while receiving more than $16,000 in various types of tax-funded transfer payments.
The end result is households in the bottom three quintiles have higher incomes after taxes and transfers than they do before taxes and transfers:
The second-to-top quintile is slightly worse off after taxes and transfers, and the highest quintile is sizably worse off. In other words, the top two income quintiles are subsidizing the bottom three, and the advantage, proportionally speaking, gets larger as income goes down.
The Politics of a Majority on the Dole
The political implications of this are considerable. As Ludwig von Mises once noted, once we get to the point that a majority of the voting population receives more in benefits than it pays in taxes, then voters will demand more and more wealth be transferred to them through government programs. It will then become politically necessary to extract larger and larger amounts of wealth from a minority in order to subsidize the majority.”
You’ve heard all of the stats before – the top 20 percent of income earners pay nearly all federal taxes, and so on – and it is one of the animating factors that powered, first, the Tea Party, and later the MAGA movement.
If Democrats regain control of congress, and Republicans on Capitol Hill refuse to grow a spine, this will only get worse. Many are rightly alarmed by the rise and acceptance of ‘Democratic Socialists’ in mainstream politics these days, but the secret is that socialism has been tightening its grip on the United States for decades.