Ted Cruz doesn’t know what the government gives him. He’s not alone.

October 25, 2013
(Jonathan Ernst/Reuters)
(Jonathan Ernst/Reuters)

Ted Cruz obtains health insurance via his wife, a Goldman Sachs employee.  The policy is worth about $20,000 per year.  When asked about this, a Cruz spokesman said the plan “comes at no cost to the taxpayer.”  As the Huffington Post points out, this isn’t true:

As with any family on employer-sponsored coverage, Heidi Nelson Cruz’s health insurance essentially functions as untaxed income. Rather than pay her an additional $20,000 in salary, Goldman compensates her just as much through her health plan, which the Cruz family won’t have to pay taxes on.

If Cruz doesn’t recognize that this is a benefit the government allows him, he’s not alone.  Most Americans who get tax deductions and tax expenditures do not realize that they are benefiting from a government program.  Cornell political scientist Suzanne Mettler calls these programs “the submerged state.”  Like programs that directly send checks to people, these programs provide real financial benefits.  For example, my wife and I get to deduct the interest from our home mortgage on our tax return.  Functionally, that is the same as if we paid our taxes without that deduction, and then the government just cut us a check for the same amount we would have saved with the deduction.  Government benefits can be distributed many ways, including through the tax code.

But, unlike with programs that do provide direct subsidies, most Americans do not think of tax credits as government benefits.  Mettler’s data shows that 60 percent of people who claim the mortgage interest deduction say they “have not used a government social program.”  The same is true for those who claim tax credits for child and dependent care or the Earned Income Tax Credit, or who pay into a 529 savings program for their children’s education.

Once tax credits are taken into account, the vast majority of Americans — 96 percent — has benefited from a government social program of some kind.  It’s just that many of us, including perhaps Cruz, don’t always realize it.

John Sides is an Associate Professor of Political Science at George Washington University. He specializes in public opinion, voting, and American elections.
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Andrew Gelman · October 25, 2013