Government subsidies of the Rich

November 16, 2011 08:04

This welfare for the well-off – costing billions of dollars a year – is being paid for with the taxes of the less fortunate, many who are working two jobs just to make ends meet, and IOUs to be paid off by future generations. – Sen. Tom A. Coburn, M.D.

Senator Tom Coburn has released a report on government handouts to people with adjusted gross incomes of one million or more. Here is the intro:

Dear Taxpayer,

Americans are facing tough times. Millions are still out of work. Wages remain stagnant, while health care costs, tuition, and other household cost continue to rise. Many homeowners owe more for their houses than they are worth.

With families across the country struggling to make ends meet during these economically trying times, many are left with few options so they are turning to the government – some very reluctantly – for assistance. The government safety net has been cast far and wide, with almost half of all American households now receiving some form of government assistance.1 But most taxpayers will be asking why when they learn who is receiving what.

From tax write-offs for gambling losses, vacation homes, and luxury yachts to subsidies for their ranches and estates, the government is subsidizing the lifestyles of the rich and famous. Multimillionaires are even receiving government checks for not working. This welfare for the well-off – costing billions of dollars a year – is being paid for with the taxes of the less fortunate, many who are working two jobs just to make ends meet, and IOUs to be paid off by future generations.

This is not an accidental loophole in the law. To the contrary, this reverse Robin Hood style of wealth redistribution is an intentional effort to get all Americans bought into a system where everyone appears to benefit.

“Everybody can have a free lunch,” explains Howard Leikert, supervisor of school nutrition programs for the Michigan Department of Education, 2 where a new federal program is providing all students, regardless of their families’ incomes, free school meals in select areas.

But not everyone can have a free lunch. Ultimately someone must pay for each of the lunches being given away. Furthermore, not everyone needs a free lunch. The real result of serving everyone a piece of the pie is less is leftover for those truly in need.

Some economists argue “if we think that the rich are getting too much of the economic pie, then they should be taxed more.”3 This is no different than taking a dollar from one pocket and putting it into another in the same pair of pants.

We should never demonize those who are successful. Nor should we pamper them with unnecessary welfare to create an appearance everyone is benefiting from federal programs.

Even in these difficult times, the United States remains a land of opportunity and not everyone is in need of government hand outs. The income of the wealthiest one percent of Americans has risen dramatically over the last decade. Yet, the federal government lavishes these millionaires with billions of dollars in giveaways and tax breaks.4

The government’s social safety net, which has long existed to catch those who are down and help them get back up, is now being used as a hammock by some millionaires, some who are paying less taxes than average middle class families. Comprehensive information on the full range of government benefits enjoyed by millionaires has never been collected previously.5  This report provides the first such compilation. What it reveals is sheer Washington stupidity with government policies pampering the wealthy costing taxpayers billions of dollars every year.

These billions of dollars for millionaires include $74 million of unemployment checks, $316 million in farm subsidies, $89 million for preservation of ranches and estates, $9 billion of retirement checks, $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. All and all, over $9.5 billion in government benefits have been paid to millionaires since 2003. Millionaires also borrowed $16 million in government backed education loans to attend college.

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 2009.6

Fleecing the taxpayer while contributing nothing is not the American way.

Americans are generous and do not want to see their fellow citizens go without basic necessities. Likewise, we expect everyone to contribute and to demonstrate personal responsibility. Government policies intended to mainstream wealth redistribution are undermining these principles. The tragic irony is the wealth in these cases is trickling up rather than down the economic ladder. The cost of this largess will thus be shared by those struggling today and the next generation who will inherit $15 trillion of debt that threatens the future of the American Dream. These consequences are the results of shortsighted spending and tax policies like those outlined in this report that should be eliminated.7


Tom A. Coburn, M.D

U.S. Senator

1 Brian Faler, More Americans Receive Government Benefits, Bloomberg, October 28, 2011;
html .
2 Lynn Moore, Under new federal program, all Muskegon Heights students get free meals, The Muskegon Chronicle, September
30, 2011; .
3 Dean Baker and Mark Weisbrot, Social Security: The Phony Crisis, University Of Chicago Press, 2000.U.S. Senator
4 For purposes of this report, unless otherwise noted, “millionaire” is defined as an individual reporting an annual
adjusted gross income (“AGI”) of $1 million or more. AGI is generally defined as an individual’s taxable income after
any allowance for personal exemptions or itemized deductions.
5 For more information on the methodology used for this report, see Section XII.
6 Los Angeles Times, IRS: Nearly 1,500 Millionaires Paid no Federal Income in 2009, August 8, 2011,
7 While this report focuses on benefits paid to individuals with an AGI of $1 million, for some of the programs
discussed, the appropriate AGI level to reduce or eliminate the benefit may be lower. This is a policy question that
Congress should address.

Download the full report here: Subsidies_of_Rich_and_Famous

Help Make A Difference By Sharing These Articles On Facebook, Twitter And Elsewhere: