20% of Federal Welfare Spending Returns to Taxpaying Households, Report Finds

Manhattan Institute report suggests policy changes to reduce the overlap between taxes and transfers, arguing the current system is wasteful.

Approximately 20% of the funds that pass through the federal welfare system are returned to the households that paid that amount in federal taxes, according to a new report by the Manhattan Institute.
The report's author, Judge Glock, suggests that this system of taxing and returning the same amount of money is wasteful, as both the taxes and transfers limit households' options and there is a bureaucratic cost to circulating income from households to the government and back.
If households receiving Social Security are not counted, the percentage of welfare payments canceled out by taxes within the same year rises to 29%.
The report suggests that individuals and families would be better off simply not paying so much in taxes in the first place.
The report recommends several policy changes to reduce the overlap between taxes and transfers, including requiring netting taxes estimates, rethinking FICA payroll taxes, converting transfer programs into tax reductions, and converting tax credits into tax withholding reductions.