Book Review

Welfare for the Wealthy

John Sides of The Washington Post interviews Syracuse University political scientist Chris Faricy on his newly published book “Welfare for the Wealthy.”

Faricy cites a few examples of how tax expenditures disproportionately benefit the wealthy: “One example is the collection of tax subsidies for private pensions. In 2015, the average household in the top 1 percent received pensions subsidies worth over $13,000 while the average benefit for a middle-class family was only $1,000. The main reason for this discrepancy is the progressive federal income tax structure.”

Faricy’s book shows the correlation between the growing polarization of the Democratic and Republican parties and the rise in private welfare spending like tax expenditures: “Political polarization relates to increased tax subsidies in three ways. First, polarization has increased the difficulty of passing new spending through the normal budget process and therefore privileges subsidies with fewer legislative veto points.”

“Second, as polarization has reduced the public trust in government, legislators have had to find a way to fund their policy priorities without being perceived as growing the government.”

“Finally, polarization has been asymmetric — with Republicans becoming more conservative than Democrats have become more liberal. Because of this, periods of divided government favor political compromises that use tax expenditures.”

“Most citizens, even educated ones, do not understand who primarily benefits from tax subsidies. The complexity of tax expenditures makes it easier to distribute federal money to unpopular groups such as the wealthy and corporations.”

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With State Taxes, the Less You Earn, the More You Pay

New York Times: “When it comes to the taxes closest to home, the less you earn, the harder you’re hit.”

“That is the conclusion of an analysis by the Institute on Taxation and Economic Policy that evaluates the local tax burden in every state, from Washington, labeled the most regressive, to Delaware, ranked as the fairest of them all.”

“According to the study, in 2015 the poorest fifth of Americans will pay on average 10.9 percent of their income in state and local taxes, the middle fifth will pay 9.4 percent and the top 1 percent will average 5.4 percent.”

“In the institute’s ‘Terrible 10’ states, the bottom 20 percent of earners pay up to seven times as much of their income in taxes as the top 1 percenters, the report says. These include Washington, where the poorest residents pay 16.8 percent of their income in taxes while the wealthiest sliver pays just 2.4 percent, followed by Florida, Texas, South Dakota, Illinois, Pennsylvania, Tennessee, Arizona, Kansas and Indiana.”

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