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the wealthy. But in passing the credit and making it “refundable,” Bush extended the concept of the tax credit in a potentially dangerous way. Now those who paid no taxes would get a check based not on their particular economic circumstances, as those who benefited from the Earned Income Tax Credit did, but simply because they had children. The EITC is really a form of negative income tax—money paid to adjust for differences in income. But the Child Tax Credit was something altogether different. It was really the start of a new form of national welfare: money people got through the tax system as an entitlement simply because they had children.

Now Obama has taken the refundable tax credit one step further, giving everyone who earns less than $190,000 a tax credit of $400 (or $800 for couples.) And if they don’t pay enough in taxes to use up the $400 credit, they will receive a check for the balance. If they pay no taxes at all, they will receive a $400 check in the mail.70

President Obama has led the United States across an important line in the sand. No longer will we hand out checks to people just because they’ve paid into the Social Security system or served the country in the military. You don’t even need to be part of the working poor or a parent to get a check. You just have to exist and make less than $200,000. The aid encompasses us all: we have all gone on welfare.

Obama’s refundable tax credit is a permanent part of the tax code, an entitlement we’ll have to honor year after year. And it is the way of such things that they never go down—only up.

Obama’s tax cuts also crossed another key line in the sand: they exempted a voting majority of Americans from having to pay any federal income tax at all.

After Bush got through with the tax code, the share of federal income taxes paid by the poorest half of the country dropped by a quarter.71 Today, the poorest half of the nation pays only 3 percent of the national income taxes.72

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THE POOREST PAY LESS AND LESS IN TAXES: PERCENTAGE OF FEDERAL INCOME TAXES PAID BY THE BOTTOM HALF OF TAXPAYERS

(Those earning less than $32,000 in 2008)

1980 7%

1985 7%

1990 6%

1995 5%

2000 4%

2006 3%

Source: Internal Revenue Service.

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Now that Obama has passed his refundable tax credit, the bottom half of the nation will probably pay no federal income taxes at all—zero, nada, zip.

Unfortunately, in the future, we can look forward to a majority of American voters having a vested interest in maintaining the Obama tax policies so that they continue to pay no taxes at all, while the burden on those who do pay taxes continues to grow exponentially.

The political ramifications of this policy will be enormous. Tax eaters will strongly outnumber tax payers, and those who are paying for our government will have little or no voice in what the government does.

But, of course, that’s not all: Because of the growth in refundable tax credits, the lower middle class and poor actually make money from the tax system. The Heritage Foundation reports that the poorest 20 percent of the country not only pay no income taxes, but they get so much money back that they have an “effective” income tax rate of minus 5.9 percent.73 The second quintile from the bottom also has a negative tax rate, although slightly smaller, of minus 1.1 percent.74 Once Obama’s tax package is factored in, the bottom half will not only pay no taxes but will actually receive checks from Washington.

But this isn’t the only shift in the tectonic plates of national income and tax policies. As the poor get to pay less and less in taxes and receive more and more in entitlements, the richest Americans will have to pay a greater and greater share of the national tax burden.

Though we’d all agree that the rich should pay a larger share of their income in taxes than the middle class or the poor, the new economics of income and taxation skew the tax payments so drastically toward upper-income families that fewer and fewer people are paying more and more of the taxes.

In 1980, the richest