Nearly Half of All Americans Don t Pay Income Taxes

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1 Nearly Half of All Americans Don t Pay Income Taxes Percentage of U.S. Population Not Represented on a Taxable Return 50% 49.5% 40% 34.1% 30% 23.7% 20% 10% 12% 0% Note: Figures for 1977 to 1982 were extrapolated due to unavailable data. Source: Heritage Foundation calculations based on data from the Internal Revenue Service, Individual Income Tax Returns, Publication 1304, , Table 1.4, and various IRS reports. Chart 1 ArticleName

2 More than 70 Percent of Federal Spending Goes to Dependence Programs Share of Total Federal Spending 80% 70% 2003: 68.3% 70.5% 60% 50% 1990: 48.5% 40% 1962: 28.3% 30% 20% 10% 0% Sources: Office of Management and Budget, Historical Tables: Budget of the United States Government, Fiscal Year 2012, 2011, Table 1.1, pp. 22 and 23, and Heritage Foundation calculations sourced throughout the Index of Dependence on Government. Chart 2 ArticleName

3 Housing Assistance Breaks Record Second Year in a Row Expenditures in Billions of 2005 Dollars $60 $50 Year-to-Year Change Increase Decrease 49% increase from 1990 to % increase from 2006 to 2010 $59.4 $52.3 $40 $30 273% increase from 1975 to 1981 $20 $10 Source: Office of Management and Budget, Historical Tables: Budget of the United States Government, Fiscal Year 2012, 2011, Table 3.2, p. 57, and Table 12.3, p Chart 3 ArticleName

4 Medicare and Medicaid Costs Rapidly Increasing Expenditures in Billions of 2005 Dollars $ % increase from 1999 to 2010 $400 Year-to-Year Change Increase Decrease MEDICARE $452 $430 $ % increase from 1989 to 1998 $200 $100 Expenditures in Billions of 2005 Dollars $300 Year-to-Year Change Increase Decrease MEDICAID $273 $251 $200 $100 Source: Office of Management and Budget, Historical Tables: Budget of the United States Government, Fiscal Year 2012, 2011, Table 3.2, p. 57, and Table 12.3 p Chart 4 ArticleName

5 Welfare and Low-Income Health Care Assistance Surges Expenditures in Billions of 2005 Dollars $1,200 $1,000 Year-to-Year Change Increase Decrease 41% increase from 2008 to 2010 $1,137 $994 89% increase from 1997 to 2007 $800 $600 87% increase from 1990 to 1996 $400 $200 Source: Office of Management and Budget, Historical Tables: Budget of the United States Government, Fiscal Year 2012, 2011, Table 3.2, p. 57, and Table 12.3, pp. 265, 266, 271, and 299. Chart 5 ArticleName

6 First of 78 Million Baby Boomers Retiring Expenditures in Billions of 2005 Dollars $1,200 $1,000 Year-to-Year Change Increase Decrease $1,053 $1,023 $ % decrease from 1998 to 1999 (only decrease) $600 $400 $200 Source: Office of Management and Budget, Historical Tables: Budget of the United States Government, Fiscal Year 2012, 2011, Table 3.2, p. 57. Chart 6 ArticleName

7 College Education: Dependence on Government Doubles Expenditures in Billions of 2005 Dollars $50 Year-to-Year Change Increase Decrease $49.3 $40 $30 $20 $10 Average, : $13.7 billion Average, : $26.2 billion $18.5 Source: Office of Management and Budget, Historical Tables: Budget of the United States Government, Fiscal Year 2012, 2011, Table 3.2, p. 57, and Table 12.3, p Chart 7 ArticleName

8 The Era of Big Farming Expenditures in Billions of 2005 Dollars $100 Year-to-Year Change Increase Decrease $90.1 $80 $62 $60 $40 $18 Average, : $49.4 billion Average, : $31 billion Average, : $51.9 billion $45.5 $20 Source: Office of Management and Budget, Historical Tables: Budget of the United States Government, Fiscal Year 2012, 2011, Table 3.2, pp. 56 and 57, and Table 12.3, pp. 265 and 270. Chart 8 ArticleName

9 Farm Subsidies and Farmer Income In the early 1990s, U.S. farming income was close to the national average. In the late 1990s when farming income surged above the national average the government raised farming subsidies by more than 67 percent. Average Household Income $100,000 $75,000 Farm Operators $83,000 $50,000 All U.S. $65,500 $25, Rural and Agricultural Expenditures, in Billions of 2005 Dollars $100 $75 $50 $25 Average, : $31 billion Average, : $51.9 billion Sources: Office of Management and Budget, Historical Tables: Budget of the United States Government, Fiscal Year 2012, 2011, Table 3.2, pp. 56 and 57, and Table 12.3, pp. 265 and 270; U.S. Department of Agriculture, Resource Management Survey, at Averagefarmincomesource/Averagefarmincomesource_d.html (November 2, 2011); and U.S. Census Bureau. Chart 9 ArticleName

10 Dependence on Government Jumps 8.1 Percent in a Single Year Index Scores % increase from 2005 to : 100 (base year) Source: Based on Heritage Foundation calculations sourced throughout the Index of Dependence on Government. Chart 10 ArticleName

11 Government Dependence Index Values and Major Policy Changes Shaded periods denote recessions 80 Health and Welfare Housing 60 Retirement 40 Education 20 Rural and Agricultural Services 0 Major Policy Changes 1965: Great Society programs: Medicare, Medicaid, Higher Education Act, Department of Housing and Urban Development 1970: Expansion of Social Security benefits 1981: First Reagan budget and tax cuts 1987: Extension of Social Security taxes to state and local government workers 1996: Welfare reform to include work requirement and Freedom to Farm Act 1998: Expansion of Medicaid to cover low-income children 2002: Expansion of agricultural subsidies, No Child Left Behind Act 2003: Passage of Medicare prescription drug benefit 2006: Hurricanes Katrina and Rita relief; Pell Grant expansion : Recession-related programs Source: Based on Heritage Foundation calculations sourced throughout the Index of Dependence. Chart 11 ArticleName

12 1 in 5 Americans Dependent on Government Percentage of Total U.S. Population Who Receive Government Assistance 25% 20% 1994: 23.1% 21.8% Individuals in Dependence Index (not Including Government Employees), in Millions : % 40 10% 11.7% % 10 0% Source: Heritage Foundation calculations based on data from the U.S. Department of Education, Social Security Administration, U.S. Department of Health and Human Services, Office of Personnel Management, and the U.S. Census Bureau. Chart 12 ArticleName

13 More Income, More Dependence In 2010, individuals receiving income from government programs took in more money ($32,748) than the average American earned in disposable income ($32,446). Income Per Capita $35,000 $30,000 $25,000 Disposable Personal Income, All Americans $32,748 $32,446 $20,000 $15,000 $10,000 Amount, Americans Who Receive Government Assistance $5, Sources: U.S. Department of Commerce, Bureau of Economic Analysis, National Income and Products Account, Table 2.1, and Heritage Foundation calculations using data from the Office of Management and Budget, U.S. Department of Education, Social Security Administration, and U.S. Department of Health and Human Services. Chart 13 ArticleName

14 More than 91 Million Americans Are Dependent on Government Sum of Program Participants and Government Employees, in Millions Year-to-Year Percentage Change of Total Program Participants and Government Employment million +10% +8% 1966: +8.5% 60 +6% 2010: +3.3% 2009: +4.2% million +4% +2% 0% 1991: +3.2% % 1982: 1.8% Source: Heritage Foundation calculations based on data from the U.S. Department of Education, Social Security Administration, U.S. Department of Health and Human Services, Office of Personnel Management, and Office of Management and Budget. Chart 14 ArticleName

15 Federal Employment Growth Highest Since 1968 Year-to-Year Percentage Change in Federal and State Employment +15% +12.9% State Federal +10% +5% 1968: +3.5% 1985: +3.3% State employment increased every year from 1984 to 2008 (average annual change: +1.7%) +3.5% 0% 1.2% 1.0% 5% Federal employment declined every year from 1990 to 1999 (average annual change: 2.4%) 10% Sources: U.S. Department of Labor, Bureau of Labor Statistics, Current Establishment Survey, Employees on Nonfarm Payrolls by Industry Subsectors and Selected Detail, Table B-1, by Haver Analytics; and U.S. Department of Defense Active Duty Military Data, by Haver Analytics. Federal data prior to 2002 is from Office of Management and Budget, Historical Tables: Budget of the U.S. Government, Fiscal Year 2009, 2008, Table Chart 15 ArticleName

16 Index of Dependence on Government, Year Housing Health and Welfare Retirement Education Rural and Agricultural Services Index Value Annual Percentage Change in Index Value * * Base year Sources: Heritage Foundation calculations sourced throughout the Index of Dependence on Government. Table 1 ArticleName