Are you a giver or a taker? No, that is not a bad pickup line from an Internet dating site—it’s a question every American should be asking themselves these days. “Do I take more than I give?”
I’m sure most of us want to be considered givers, not takers. After all, we grew up with the old adage that “it is better to give than receive.” But we all know people who are more takers than givers.
We’ve all seen someone who brings a small salad to the potluck but piles lots of your casserole on his plate. Or, there is always one person in the lunch group who orders the most expensive meal on the menu because she knows you are all splitting the check.
The same thing happens with government. A growing number of Americans are contributing little but taking a lot, and a shrinking number are giving a lot but taking little.
Recent IRS data for 2008 reports that a record 52 million Americans—or 36% of all filers—filed a taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. return but had no income tax liability because of the generosity of the credits and deductions that have been enacted over the past 15 years.
The tax code has always had exemptions to protect the poorest Americans from paying income taxes, but the new credits—such as the child tax creditA tax credit is a provision that reduces a taxpayer’s final tax bill, dollar-for-dollar. A tax credit differs from deductions and exemptions, which reduce taxable income, rather than the taxpayer’s tax bill directly. , Making Work Pay credit, and First Time Homebuyer credit—are now exempting middle-class families from the income tax.
Remarkably, a family of four earning up to $52,000 can expect to pay no income taxes because of these various tax credits. That too is a record.
Many more of these taxpayers are now getting checks back from the IRS even though they pay no income taxes. The IRS paid out $70 billion in “refundable” checks to non-payers in 2008. In essence, lawmakers have turned the IRS into an ATM machine for welfare benefits—and ATM now stands for Another Taxpayer’s Money.
Sadly, millions of people now see April 15 as payday, not tax day.
President Obama’s policies, from health care to taxes, are all intended to increase the number of takers in America while reducing the number of givers. Our analysis of Obama’s FY 2011 budget plan shows that it would increase the amount of redistribution from the top 10% of families by nearly $100 billion per year—to a total of $854 billion—while expanding the amount of government benefits targeted to the middle and upper-middle classes.
Economists have identified a phenomenon they call “fiscal illusion.” When people perceive the cost of government is less than what it really is, they will demand ever more government. The real danger today is not just that we have so many non-payers, but that the $1.5 trillion deficit is making the cost of government look cheap for all of us. So much spending is raining down on us that it now seems like “free money” in a sense.
Every marketing guru will tell you that people love free stuff and that they will take as much as they can get whether they need it or not. But for a nation, this is a recipe for fiscal disaster.
Once upon a time, Americans took pride in being self-reliant and there was a stigma about taking handouts from government. It is time we renewed that sense of pride and reject the notion that we are entitled to handouts from government.
Repeat after me: “I will no longer be a taker … .”
Hodge is president of the Tax Foundation, a nonprofit, nonpartisan research and educational organization that has monitored fiscal policy at the federal, state and local levels since 1937.Share