The Absurd Entitlements that the Rich are Entitled to
Most wealthy people complain about the huge amounts of government subsidies targeted towards the poor and the financially disadvantaged. Their complaints reveal greed, ignorance, a total lack of fair-play, or an amalgamation of all entitlement symptoms, at the top. While the rich feel that they are being treated harshly for their wealth, this can’t be further away from the truth…
The Poor as well as the rich, both get safety nets
Thomas Piketty, Gabriel Zucman and Emmanuel Saez calculated that, in 2014, on an average, the middle class enjoyed the benefits of safety nets more than the poorer class did. Specifically, 40% of all American adults with wages under the top 10% got more safety net transfers from federal programs (SNAP/food stamps, Medicare, Veterans’ benefits, Medicaid, etc., but Social Security removed) than the poorer 50% of Americans and if Social Security and Medicare are included, the richest 10% benefitted from government transfers, as much as the poorest 50%.
In 2014, if Social Security and Medicare are both counted, the average domestic unit in the .01% (with assets of more than $100 Million) gained more in government transfers than the average households in the poorer 50%. Social Security notwithstanding , the multi-millionaires secured two-thirds of the federal transfers given to the poorest 50%. Over 90% of safety net entitlements go towards the elderly, working households or the disabled. This explains the approximations that the American households that make the poorest 20% get only about 33% of all federal benefits, which is roughly $250 billion out of the entire $740 million of the ‘welfare’ budget. This translates to approximately $10,000 for each of the 25 million households that constitute the bottom 25%, and this surely cannot compare with all the tax benefits that wealthy households receive.
The rich strike gold with Social Security and Medicare
As the wealthy American lives longer than the average American who is low-income, they benefit more from Social Security and Medicare as per a study by National Institutes of Health. A Brookings report, estimates that the lowest 20% Americans who were born in 1960 would receive only receive 78% of lifetime benefits from Medicare received by 20% with top incomes. Middle class Americans dip into Medicaid, as it accommodates asset-exclusion limits.The progressiveness of the U.S. federal tax structure ensures that big incomes acquire the burden of higher federal taxes and better investments in Social Security. It is said that a low-earning married couple is taxed about one-third the amount which is paid by high earning married couple where one of them is a high earner while the other gets average salary.
Excessive Entitlement Aid: Tax Benefits are purely for the Rich
An ‘entitlement’ is a person’s right to get benefits or value that is provided by law and comprises of a mandatory safety net program and adequate subsidies arising out of revisions in tax laws. As per research, the following summarizes tax entitlements of the richest 1%, the poorest 20%, and the richest 20% of all households.
The Poorest 20% Households each Get about $3,000 as Tax Entitlements while the top 20% Households each Get about $18,000
CBO estimations say that $72 billion out of a total of $900 billion tax breaks in 2013 or 8% went to the bottom 20% with government tax subsidies to the tune of $1,500 to $3,500 for the bottom 20%. When CBO itemized ten major tax expenditures, including employer health insurance, capital gains, state and local tax breaks and pension deductions, and in 2013 about $450 billion or over half of these benefits went to the highest 20% (25 million households) with $18,000 per household.
More Lucrative Tax-break Entitlements for the Wealthy
It has been said time and again that the tax breaks benefit only the super-rich Americans. How so? Let us tell you how’
(1) The mortgage interest deductions for secondary homes, possibly even a yacht;
(2) A luxury home benefit up to $ 500,000 tax-free for couples selling homes;
(3) A rich-couple subsidy worth $10 million tax-free on their property,if their property and estate passes on to heirs;
(4) Deductions for landlords on rental properties, unlikely low-income people;
(5) A $127,200 cap on taxes levied on Social Security, for the richest 10% US citizens;
(6) Tax breaks on those 401(k) accounts which are not owned by lower-income individuals;
(7) Financial aid for higher education, especially from Ivy League Colleges admitting more students from top 1% families than the total bottom 50%; lastly
(8) Miscellaneous perks as entitlements, such as gambling loss deductions, business meals and tax preparation.
Finally the defenders of entitlements for the rich should understand that for the total federal tax paid, poor Americans contribute to about 25% of total taxes, when the rich 1% pay about 18% to 23%. Wealthy Americans can keep complaining about all the ‘entitlements’ that go to the poor, even though they are adding to their own entitlements.
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