In 2008, 36% of those who filed tax returns did not pay any tax but they received a refund. How could this happen? Was this a clerical error? Unfortunately, no, it wasn't.
In the tax law, there are certain "tax credits", namely the earned income tax credit and the child tax credit. These are not normal tax credits that the average taxpayer would realize. These particular tax credits actually allow tax filers who have not paid any tax to receive a refund.
How can someone get a refund from nothing? Where does this refund money come from? In essence, the refunds paid to the non payers come from the taxpayers that did pay tax. So the other 64% of the population paid off the 36% who paid nothing. This is in addition to all the taxpayer paid services that the 36% have used for free.
So how much did they get in refunds? The total cash paid to these freeloaders was over $70 BILLION!
Now it is only going to get worse. Obama wants to add more "refundable credits" into the tax law, thus increasing the percent of those who pay nothing who will get refunds, taking more from those that do pay tax. Normally people who steal go to jail, but these tax credits are legalized theft and allowing people to steal.
How much can be taken from the producers and paid to the freeloaders before the number of freeloaders exceeds the number of producers?
The 36% is already at a dangerous level. With the increases in unemployment in 2009 and 2010, that percent will only get higher. Increasing the amount of refundable credits will expand this percent exponentially. At some point, there will not be enough producers to carry the weight of the looters. This is income redistribution by stealth and will destroy what is left of our free market system. We are getting closer and closer to tyranny and being a dependency state. I wonder what the 36% will do when there is no one left to pay them to do nothing.