The Welfare State Robs Peter to Pay Peter

The American welfare state is built on the idea of taxing those who are better off to give to those who are in need. Yet in today’s massive welfare state, many who receive benefits from the government also pay substantial taxes.

New research by the Manhattan Institute analyzes the amount of government benefits that are offset by taxes on the same households in the same year. The report estimates that about 20% of government benefits are returned to the government through taxes. That means that in 2022 almost $800 billion—or roughly what the government spent on defense—went out one door and in another.