Who Wants to Subsidize a Millionaire?

by Veronique de Rugy

 

While I don’t think that millionaires should be targeted, as a group, for tax increases, I don’t think the government should be giving away money to them, either. It’s stunning how little attention is paid to the absurdity of government spending taxpayer dollars on millionaires and billionaires. I had been meaning to look into just how much the government is giving away to high-income earners, but I never got around to doing it. Thankfully, Sen. Tom Coburn just produced a new report called “Subsidies of the Rich and Famous,” which shows that over $9.5 billion in government benefits have been paid to millionaires (defined as having annual gross income, AGI, of at least $1 million) since 2003. 

The report also highlights that millionaires borrowed $16 million in government-backed education loans, and that “on average, each year, this report found that millionaires enjoy benefits from tax giveaways and federal grant programs totaling $30 billion. As a result, almost 1,500 millionaires paid no federal income tax in 2009.”

Some of the subsidies for millionaires include:

— $316 million in farm subsidies;
— $89 million for preservation of ranches and estates;
— $75.6 million in residential energy tax credits; and
— $7.5 million to compensate for damages caused by emergencies to property that should have been insured. 

Read the full report here

We can debate whether or not it is fair to eliminate payments such as retirement benefits ($9 billion according to the report) and unemployment benefits ($74 million) for millionaires. Even though millionaires’ dependency on these programs is questionable, they do pay into a system that is sold to taxpayers as a form of insurance or investment in one’s future. My preferred option would be to reform the system altogether, with the elimination of these subsidies being a second-best alternative. 

What is more striking here is the absurdity of a system that taxes people on one hand and gives back on the other. This is also true for the middle class, which is heavily taxed and receives large amounts of government subsidies. I can’t imagine that this system is efficient. Wouldn’t it make more sense to keep our money and pay for most goods and services ourselves? After all, most of the stuff that the federal government pays for isn’t by nature a public good and should be supplied at the state and local levels, or at the private level.