Where's the Tipping Point?
Joining Rob Long, James Lileks and me in recording a podcast just now, former Secretary of Defense Donald Rumsfeld explained that he was concerned above all about one domestic matter: the
tipping point. "If we got to the point at which more than 50 percent of Americans receive more from the federal government than they pay in taxes," Secretary Rumsfeld said--I'm quoting from memory here--"then we'll be in serious trouble."
Which of course raises this question: How close to the tipping point are we?
This strikes me as tricky to calculate, a piece of research that would require a thorough and detailed knowledge of the federal budget. Does anyone know of any good studies that have already been conducted? Could you provide us with a summary? Or a link?
The Mind of Ricochet. To work!
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Mar '11
Re: Where's the Tipping Point?
Sorry, don't have a good link, but I recall a number like about 47%, currently - obviously, the precise number is complicated (Paul Ryan would know), but it should be blindingly obvious that, in order for Mr Obama to have been elected, we must have gone past the tipping point already. Not just tax, but education, culture, demography, etc, etc.
The question now is whether we can get ourselves outa serious trouble - not at all obvious.
Nov '10
Re: Where's the Tipping Point?
This tipping point is dangerous not only fiscally, but also psychologically. With over 50% of the population paying in nothing but receiving much and naturally pushing for more, they are all representation and no taxation. The 5-10% paying the bulk of federal taxes become statistically insignificant electorally -- all taxation and no representation. At what point do these people give up, feeling voiceless and disenfranchised? What happens then?
Re: Where's the Tipping Point?
This op-ed by Ari Fleischer in the WSJ is slightly dated (4/09), but it gives you a ballpark answer.
This WSJ report echoes the figure that David cites above. 47% pay no income tax.
Jun '10
Re: Where's the Tipping Point?
If I'm reading this correctly, 2014 looks like one kind of turning point. We may have already passed through the actual turning point, to where we can't grow fast enough to ever catch up with the debt. At least not without 1930s-type pain and displacement.
http://www.cbo.gov/ftpdocs/120xx/doc12039/BudgetTables.pdf
Re: Where's the Tipping Point?
I can't comment on calculating our nearness to the tipping point, but wanted to add simply that I've been listening to Rumsfeld read Known and Unknown aloud in my car every day while toting my kids hither and yon. It's a wonderful listen. The material is extremely interesting in and of itself, and Rumsfeld has a delightfully chatty, intimate reading style with lots of natural inflection to it. Highly recommended.
Mar '11
Re: Where's the Tipping Point?
yes that 47% figure is from the Tax Policy Center from 2009 and I have no reason to doubt its accuracy. Peter, to me the question is how do you define "receive from the federal government". if we are talking about the value of the services the federal government provides (national defense for starters) then we are already well past the tipping point, because obviously even the next 3% (who pay a modest amount of tax) are receiving services of greater value than the taxes they pay in.
but I assume we're talking about cash or in-kind payments. haven't found anything on that recently but here's a link to a year 2000 irs report that suggests the vast bulk of peoples' cash incomes in the lower brackets (sub-50k) is still wage income.
http://www.irs.gov/pub/irs-soi/bloomq.pdf
so my take is: more than half the country is already getting more "value" from the country than they are paying in taxes, and it's not even close. but in terms of cash payments? probably not yet close.
Mar '11
Re: Where's the Tipping Point?
Here's a link that suggests we are already beyond 50% by some measures:
http://www.foxbusiness.com/markets/2011/04/20/government-cash-handouts-exceed-tax-revenues/#ixzz1K571XEUK
Jan '11
Re: Where's the Tipping Point?
FYI
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Jan '11
Re: Where's the Tipping Point?
Sorry - my info was without context - I can't find the percentage of Canadians that pay income tax, but with the (?)relatively low threshold of $10,382, most people seem to have some sort of skin in the game.
Dec '10
Re: Where's the Tipping Point?
http://www.thefiscaltimes.com/Columns/2011/04/18/Budget-Deficit-Government-Handouts-Top-Tax-Income.aspx
Jun '10
Re: Where's the Tipping Point?
The flaw in the theory is that people of different income levels do not vote at the same rates. The middle class is more likely to vote than either the young or the poor. Assuming fifty-percent is some kind of breaking point rests on the notion that all demographic groups vote at the same rates. The equation is more complex than a single variable.
Sep '10
Re: Where's the Tipping Point?
The tipping point would be better defined as, "...the point at which more than 50 percent of Americans [who will vote] receive more from the federal government than they pay in taxes..." Put this way, the tipping point may yet be pretty far away.
Or is this so obvious that it is automatically understood?
And I see by Paules' post above that he beat me to this general point.
Edited on Apr 21, 2011 at 12:58pmApr '11
Re: Where's the Tipping Point?
Dan Holmes: The tipping point would be better defined as, "...the point at which more than 50 percent of Americans [who will vote] receive more from the federal government than they pay in taxes..." Put this way, the tipping point may yet be pretty far away.
Or is this so obvious that it is automatically understood?
And I see by Paules' post above that he beat me to this general point. · Apr 21 at 12:28pm
Edited on Apr 21 at 12:58 pm
I think this is an interesting point. Is there any data to substantiate this? I would suspect that seniors vote in some of the highest numbers, yet they pay little in terms of income tax since they no longer have active income streams. I suspect seniors are also likely to vote themselves more benefits in general since they don't have to pay for them and are on fixed incomes, so they often need all the help they can get, and will abandon principles to get a "handout".
This is almost entirely speculation on my part, and hopefully someone will be more ambitious than I am right now and do some research into this.
Dec '10
Re: Where's the Tipping Point?
I concur with David Williamson's take in the above post. Households now receive more in various payments from the government than they pay in taxes. That means individual voters now get more than they pay in, on average, and that's what the average potential voter will carry with them into the voting booth. That's a tipping point.
Apr '11
Re: Where's the Tipping Point?
On another note, I thought I heard a statistic quoted recently where something like 65-70% of people take more out of the system than they pay in. Anyone familiar with this?
Jan '11
Re: Where's the Tipping Point?
Of those who filed, just over 750,000 Canadians paid no federal income tax, denominator is 25M
http://www.cra-arc.gc.ca/gncy/stts/gb08/pst/fnl/html/st2ca-eng.html
Re: Where's the Tipping Point?
Yes, I was thinking the same thing, and notice how Peter worded this -- quoting Rumsfeld -- when more than 50% take out more than they receive. I am pretty sure Jonah Goldberg cited a statistic in a recent column saying that number was 60%. If so, we're way past the tipping point as defined by Sec. Rumsfeld. No matter how you define that point, we are perilously close. I don't think we're beyond reversing it, or I'd have to be institutionalized.
Re: Where's the Tipping Point?
Indeed, this must be where Jonah got it: the Tax Foundation says that the bottom 60 percent of American families will as a group receive more in government spending than they pay in taxes.
Notice: That's 60% of families -- I don't know what percentage that would be of total people. Also -- it strikes me as a bit humorous in a sick sort of way that they describe it as "the bottom 60%," which is unintentionally symbolic of where we are. The bottom -- as if the top 10% of the bottom 60% should be considered bottom of anything, is interesting. I know, I know, they're just identifying which 60% it is, but I still think it's interesting.
Feb '11
Re: Where's the Tipping Point?
Hence the "patriotic" appeal to "get out the vote" we hear every election, which oddly enough always seems to target those demographic groups which tend to swing left. Yeah, let's "Rock The Vote!" by busing a bunch of politically-ignorant and naive nineteen-year-olds to the polls every four years so they can vote for...?
..."Like I, like, know, it's like, the umm, like Republicans are like baaaaadddd, like, you know"?
May '10
Re: Where's the Tipping Point?
Voter perception of this may be more important than exact calculations. If a majority perceives that spending cuts are going to cost them more than they save, we will be in trouble even if we have not techically reached 50% or more. The perceptions are formed in debate, media and the culture at large. A culture that breeds confident and self-reliant citizens is the best defense of freedom.