WASHINGTON — Subsidies and tax breaks for millionaires cost the U.S. government an average of $30 billion a year, according to a report released Monday by Sen. Tom Coburn, who wants to put new caps on federal benefits.
Coburn, R-Muskogee, wants to limit Social Security benefits for the wealthiest Americans and make them pay more for Medicare. The senator is also calling for an end to farm payments, unemployment benefits and certain tax write-offs for those with adjusted gross incomes above $1 million.
Coburn said Monday that government programs and tax policies are “subsidizing the lifestyles of the rich and famous.”
He said, “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.”
‘Reverse Robin Hood'
Some in Congress have argued that means-testing certain programs, including farm aid and Social Security, would turn them into welfare programs, subverting their original purposes and attaching stigmas to them.
But Coburn said Monday that the system has produced a “reverse Robin Hood style of wealth distribution” because of “an intentional effort to get all Americans bought into a system where everyone appears to benefit.”
Coburn's new report expands on a theme that was part of the plan he released in July to cut $9 trillion in spending over 10 years. Though Coburn has broken ranks with his party to say he would support tax code changes to bring in more money, he also has stressed that the government shouldn't be paying money out to people who don't need it.
Last month, he won support from the Senate to end annual farm subsidies called “direct payments” to those with adjusted gross incomes of more than $1 million. He also has won passage of an amendment to prohibit unemployment benefits to millionaires.
Since 2006, millionaires have claimed nearly $114 billion in tax deductions and credits, with about $100 billion of that for rental expenses and home mortgage interest deductions.
From 2006 through 2009, millionaires claimed more than $21 billion in gambling losses as deductions, the report says.
Because of the various deductions and credits, about 1,500 millionaires paid no federal income tax in 2009, the report states.
“Fleecing the taxpayer while contributing nothing is not the American way,” Coburn said.
Coburn is not calling for an end to Social Security retirement payments to millionaires, since they pay into the system. But he says the payments should be “restrained.” On Medicare, Coburn is recommending that those with adjusted gross incomes of $1 million or more pay the full cost of their premiums for Part B insurance, which covers physician visits and outpatient services, and Part D, which covers prescription drugs.
He has previously called for the home mortgage interest deduction to be limited to one home and to $500,000.
“Congress should take a hard look at the tax code and reduce or eliminate a number of confusing and misplaced tax breaks, including those utilized by millionaires,” he said Monday.
At a glance
According to Sen. Tom Coburn's new report, millionaires received:
• $74 million in unemployment benefits between 2005 and 2009.
• $316 million in farm program payments between 2003 and 2009.
• $76 million in residential energy tax credits in 2009.
• $89 million in conservation program payments in 2009 and 2010.
• $7.5 million in disaster housing payments between 2007 and 2010.