Stop subsidizing millionaires, says... Coburn?

If you told me that somebody had published a comprehensive report on wasteful government policies which dole out billions of dollars to the wealthiest individuals in the country, one of the last people I’d expect to find as the author would be Senator Tom Coburn.(R-OK) But that’s precisely what unfolded when I found that the senator had borrowed a tag line from 1970s television programming and released, “Subsidies of the Rich and Famous.”

U.S. Senator Tom Coburn, M.D. (R-OK) today released a new report “Subsidies of the Rich and Famous” illustrating how, under the current tax code, the federal government is giving billions of dollars to individuals with an Annual Gross Income (AGI) of at least $1 million, subsidizing their lavish lifestyles with the taxes of the less fortunate.

“All Americans are facing tough times, with many working two jobs just to make ends meet and more families turning to the government for financial assistance. 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. Multi-millionaires 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. 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,” Dr. Coburn said.

Digging into the meat of this, it actually goes in an entirely different direction than what I’d imagined from reading the title. We can make a fair and valid argument against jacking up the taxes on one particular set of Americans (i.e. the wealthy) but that’s not what Coburn is talking about here. It’s a point which Veronique de Rugy makes over at National Review.

While I don’t think that millionaires should be targeted, as a group, for tax increases, I don’t think the government should be giving away money to them, either. It’s stunning how little attention is paid to the absurdity of government spending taxpayer dollars on millionaires and billionaires…

What is more striking here is the absurdity of a system that taxes people on one hand and gives back on the other. This is also true for the middle class, which is heavily taxed and receives large amounts of government subsidies. I can’t imagine that this system is efficient. Wouldn’t it make more sense to keep our money and pay for most goods and services ourselves? After all, most of the stuff that the federal government pays for isn’t by nature a public good and should be supplied at the state and local levels, or at the private level.

The reality is that most of the complaints here deal with largely cosmetic issues in terms of the raw numbers. We’re talking about a figure in the single – or at most double – digits of billions of dollars. (Insert the usual caveat here about the fact that this is a huge sum of money for any one individual, but it’s peanuts compared to our annual deficit.) But even if this isn’t a discovery which would yield enough cash to solve our fiscal woes, that doesn’t mean that it’s something which fiscal conservatives shouldn’t look into. It does seem fairly insane on the face of it.

But nothing is ever simple, and this report is no exception. Some of that money being paid out may sound outrageous to the middle class rank and file, but portions of it would be rather hard to take away. Certainly we can argue in favor of means testing for unemployment checks and farm subsidies are just a bad idea to begin with. But the report also includes $9 billion of retirement checks. Retirement is something you earn over a lifetime of work, so are we really justified in telling somebody that they can’t collect it just because they were successful in life?

Some of these expenses can certainly be cut. But we need to be careful not to institute a policy where it becomes accepted political ideology to simply pick the pockets of the wealthy whenever we see a dime going their way. Still, it’s an interesting report and we’ll have to wait and see if it translates into any concrete legislation in congress.