Should We Be Worried about 'Zero Net Taxpayers'?

In the past decade, libertarians, free-market think tanks, and conservative media and politicians in English-speaking countries (Romney, 2012; Ryan, 2010; Morrison, 2016) have increasingly argued that a growing share of the population are receiving more in benefits than they pay in taxes, and are “voting for a living”. This presentation of a class conflict between ‘tax producers’ and ‘tax consumers’ is related to public choice theories (MacLean, 2017), and has also been argued in Sweden (Lindbeck, 1983, 1985, 1997). Statistics on the share of the taxed and the “taxed not” are used to argue that tax systems are too progressive, and that welfare states have become over-generous and unsustainable. This article analyses the creation, interpretation and development of measures used to estimate the number of the taxed and the taxed nots. The paper shows that the share of households who receive more in benefits than they pay in taxes is very similar across countries and is not related to the size of the welfare state, the distribution of benefits and taxes or the welfare state regimes commonly used to classify different countries. The paper analyses the relationship between these concerns and political rhetoric justifying austerity policies.