Ezra Klein wrote quite an incendiary article titled “The invisible welfare state of the top one percent,” which talks about Suzanne Mettler’s book “The Submerged State.” While it implies concentration on the 1% so typical in today’s rhetoric, it actually goes further to show how absolute majority of Americans benefit from some kind of government “welfare” without even realizing it. This is very interesting idea:
If Americans who either rent or own their homes outright were asked to accept a tax increase of $150 billion in order to subsidize the mortgage payments of their indebted friends, it seems unlikely they would find that appealing. The same goes for asking Americans who don’t get health insurance through their work to spend $100 billion or so annually subsidizing the benefits for those who do. Of course, that’s exactly what’s happening right now, but it’s hidden in the tax code, so most Americans don’t know it and can’t protest it.
While this research equates tax breaks with welfare handouts, I think it’s not completely true. Article focuses on not taking as much taxes as from baseline case taxpayers as some kind of handout, when it isn’t. Instead, the people who don’t get those tax breaks who are punished. Punished for not taking on unnecessary credit risks with mortgages they can’t afford. Punished for taking available jobs without benefits. Punished for being frugal, lacking ambition or not going too far with consumption. The tax code is very complex, too complex, to the point where it might be no longer fair to anyone. I think there should be a significant research dedicated to closing tax loopholes and overall increase in fairness and clarity of taxation process.