When Republican presidential candidate Mitt Romney said at a May fundraiser that 47 percent of Americans depend on the federal government for assistance, he was understating his case. It’s closer to 100 percent.
Ninety-six percent of Americans have benefited from government help at some time, including from breaks in the tax code, according to Suzanne Mettler, a professor of government at Cornell University and John Sides, an associate political science professor at George Washington University.
The remaining 4 percent? Most are young adults who don’t qualify for most government programs, they say.
“You might get to a point in midlife where you think, ‘I’m one of the earners, not one of the takers,’” Mettler said in an interview. “In fact, your life has long been affected by the social policies you were able to use early in life, such as a Pell grant.”
While Medicare and Medicaid -- which covered more than 100 million Americans combined last year -- are the most obvious government benefits along with Social Security, there are many other policies and programs available.
These include the tax credits or itemized deductions used by more than 70 percent of filers; Pell grants, which in the 2010-2011 school year aided approximately 9.3 million low-income people, or 36.3 percent of all U.S. undergraduate students, in paying for college; and the G.I. bill, which has been used for educational benefits by 21.9 million veterans from the program’s inception through Sept. 30, 2011.
“As the data shows, Romney’s comment managed to offend just about everyone in America,” said Mark McKinnon, a former political adviser to President George W. Bush and one of several Republicans who have distanced themselves from the candidate’s remarks.
The 96 percent figure comes from a national survey of 1,400 people conducted in 2008 by the Cornell Survey Research Institute for Mettler. Ninety-six percent of respondents said that at some point in their lives they had benefited from at least one of 21 government social policies. Sixty-five percent said they had used four or more.
Romney’s assertion at the Florida fundraiser that 47 percent of Americans view themselves as “victims” dependent on government leaves out the millions more who have taken advantage of tax deductions, which are just another way the government redirects money for public purposes.
Republican vice presidential candidate Paul Ryan said in a Bloomberg Television interview today that some tax breaks would be eliminated under the Romney-Ryan proposal and that some deductions favored by middle-class families and lawmakers might remain. Their plan would start by targeting tax benefits for high-income taxpayers.
“There’s clearly fiscal space for important preferences for middle-class people like purchasing a home, or donating to charities, or health care,” he said. “The key is, start with the high-income earner and then start with the special-interest stuff.”
Ryan wouldn’t say whether he would endorse cuts to preferential treatment for carried interest, or the share of profits that private-equity managers receive.
Romney’s tax returns indicate that he benefited from deductions for charitable giving. He makes most of his income from investing his fortune, estimated at $250 million, and much of that income is taxed at a top rate of 15 percent, rather than the 35 percent that applies to wages.
Romney is a co-founder of Bain Capital LLC, a Boston-based private-equity firm. He paid a 14.1 percent federal tax rate on $13.7 million of income in 2011, his campaign said on Sept. 21, and his previously released 2010 tax return showed that he paid a 13.9 percent rate on $21.7 million in income.
For 2011, 46 percent of households didn’t pay federal income taxes, according to the Tax Policy Center, a nonpartisan group in Washington. About half had no tax liability because of standard deductions and personal exemptions designed to exclude subsistence levels of income from taxation.
The rest received tax breaks, including the earned income tax credit; child tax credit; an exclusion of combat pay; and tax benefits for older Americans such as the partial exclusion of Social Security money from income. The Tax Policy Center said most workers who owe no income tax pay Social Security taxes and other levies imposed by their states and localities.
President Barack Obama attacked Romney’s remarks.
“I don’t think we can get very far with leaders who write off half the nation as a bunch of victims who never take responsibility for their own lives,” he said in a campaign speech on Sept. 27 in Virginia Beach.
Most voters are aware of Romney’s leaked comments. Fifty-five percent reacted negatively to them while 23 percent reacted positively, according to a Sept. 27-30 poll by the Pew Research Center for the People & the Press. Still, 49 percent of the voters who identified Romney as the candidate who made the statement said the media are giving the story too much attention.
Romney campaign spokeswoman Andrea Saul disagreed that lower capital gains taxes or the child tax credit qualify as government programs.
“Despite the president’s efforts and claims, small-business owners providing services to the government and families funding those services with their taxes are not government beneficiaries,” Saul said. “They are hard-working Americans struggling in the Obama economy.”
Saul’s response speaks to how some Republicans view government programs. Tax deductions aren’t a federal benefit, said Douglas Holtz-Eakin, a Republican economist and presidential-campaign veteran who ran the Congressional Budget Office from 2003 to 2006.
“We’re using income tax to raise funds to pay for the government, and we have chosen not to tax some things for that purpose, and that’s because we presumably think they have some social benefit,” he said. “If the trend continues and you get into a situation where the people who don’t pay taxes are the majority then there’s good reason for concern.”
Most Americans gain from tax breaks -- known in Washington as “tax expenditures” because they involve revenue the government forgoes, said Jane Gravelle, a senior specialist in economic policy at the Congressional Research Service, which provides policy analysis to U.S. lawmakers. Gravelle estimates that at least 70 percent of tax filers, or 98 million Americans, have either a tax credit or some type of itemized deduction or both.
“It’s ubiquitous,” she said.
To be unable to benefit from such breaks one would need to have insufficient income to be able to use the earned income tax credit, no capital gains or dividend income, no children, no municipal bond interest and no employer-provided health insurance. And one couldn’t itemize deductions or be on Social Security.
Twenty-three percent of people who pay taxes benefit from the deduction for charitable contributions alone, and 23 percent gain from either the mortgage interest or property tax deductions, according to the Tax Policy Center. Thirteen percent benefit from the special tax rates for long-term capital gains and qualified dividends.
“It’s these submerged policies that are harder to recognize as government social benefits,” Mettler said. “They tend to benefit particularly high-income people.” By contrast, she said, policies that mainly aid low-income people are more often viewed as “government social benefits.”
A February study by the Tax Policy Center found that eliminating tax breaks for individuals would reduce the after-tax incomes of the top 1 percent of filers by 19.8 percent, compared with 12.3 percent for the population as a whole.
Other government benefits come to those who work for companies that have contracts with the federal government, totaling 141,262 last year. Employees of Lockheed Martin Corp., which had the highest-value contracts at $42.92 billion last year, and Boeing Co., which had $22.06 billion, win from their companies’ ties with the federal government.
New York University Professor Paul C. Light calculated there were 7.6 million federal contractor employees in 2005, when contract spending was $90 billion lower in inflation-adjusted dollars than in 2011.
“Government funding supports their jobs,” Sides said.