According to the Census Bureau, 49% of Americans in the second quarter of 2011 lived in a household where at least one member received a government benefit. (The total population at the time was 305 million).
That’s up from 30% in the 1980s and 44.4% in the third quarter of 2008, a recent growth in part attributable to the bad economy of President Obama’s first term.
The Census Bureau broke the data down like this:
26.4% of U.S. households had someone enrolled in Medicaid (the health-care program for low-income Americans)
16.2% of households had at least one member receiving Social Security.
15.8% lived in a household receiving food stamps
14.9% had a member with Medicare benefits
4.5% of households received assistance with their rent
1.7% had a member receiving unemployment benefits.
Mr. Romney correctly noted that nearly half of Americans pay no federal income tax. Who are all these people? And how did we get here?
Here’s a quick answer. Roughly half of U.S. households that pay no federal income tax are exempted because of basic provisions such as limitations on tax for low-income earners, according to a 2011 study by the nonpartisan Tax Policy Center. The other half benefit from targeted breaks (known to tax geeks as “tax expenditures”), such as assistance for the working poor and for children in moderate-income families. Seniors also benefit from some of these targeted breaks.
To analyze which breaks are most important in moving people off the income-tax rolls, the TPC study arranged these tax expenditures into eight categories:
Elderly tax benefits (the extra standard deduction for the elderly, the exclusion of a portion of Social Security benefits, and the credit for the elderly);
Credits for children and the working poor (the child tax credit, the child and dependent care tax credit, and the Earned Income Tax Credit);
Exclusion of other cash transfers (such as welfare and disability payments);
Tax-exempt interest and some other deductions, such as for retirement savings;
Other credits; and
Reduced rates on capital gains and dividends (zero rate on gains and dividends that would otherwise be taxed at 10% or 15%, 15% rate combined with credits).