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The idea of distributing federal savings back to American taxpayers in the form of 'DOGE dividends' has recently gained traction, largely fueled by a social media exchange between Elon Musk and President Trump. This novel concept, which originated from investor James Fishback, suggests using savings from federal government cuts to send checks to taxpayers. However, the policy, as proposed, may leave out low-income Americans who do not meet a specific tax threshold.

The Origin of the DOGE Dividend Proposal

Fishback, a 30-year-old investor and CEO of investment firm Azoria, claims that the idea came to him in a dream. Upon waking, he collaborated with a lead researcher at his firm to craft a proposal that eventually reached the White House through key administration figures. Fishback’s concept is based on the premise that Musk’s Department of Government Efficiency (DOGE) will generate substantial government savings by eliminating unnecessary expenditures.

Musk quickly amplified the idea by sharing it on social media, catching the attention of Trump. By Wednesday, the president had publicly acknowledged the idea at the FII Priority Summit in Miami Beach. Trump expressed enthusiasm, stating that under consideration is a plan to allocate 20% of DOGE’s savings to American citizens and another 20% toward paying off the national debt. The proposal envisions DOGE achieving $2 trillion in savings through budget cuts. Fishback's plan would take 20% of those savings—approximately $400 billion—and distribute them among 79 million taxpaying households. Each qualifying household would receive an estimated $5,000 rebate.

Who Gets Left Out?

While the concept of redistributing government savings is appealing, there is a significant caveat: low-income Americans may not qualify. The plan stipulates that only net-income taxpayers—those who pay more in federal taxes than they receive in benefits—would be eligible for the DOGE dividend. This means that individuals and families who fall below a certain income threshold, and thus owe little to no federal income tax, would not receive a check. According to data from the Pew Research Center, most Americans earning under $40,000 annually effectively pay no federal income tax. This implies that a large portion of lower-income citizens, who often benefit the most from financial assistance, would be excluded from the rebates. The pandemic-era stimulus payments, in contrast, were distributed to a broad spectrum of Americans, including those with lower incomes.

Fishback argues that excluding low-income recipients from the DOGE dividend will mitigate inflationary concerns. He claims that tax-paying households have a lower propensity to spend and a higher tendency to save or invest their rebate, thus avoiding excessive consumption that could drive up prices. By contrast, pandemic relief payments were sent indiscriminately, sometimes constituting up to 30% of an individual’s annual income, leading to inflationary pressure.

Potential Challenges and Criticism

Despite the enthusiasm from Trump and Musk, the DOGE dividend proposal faces skepticism and logistical hurdles. The Department of Government Efficiency claims it has saved $55 billion to date, but some of its reported savings have been disputed. For example, one claim that the agency saved $8 billion from canceling a single Department of Homeland Security contract was later revealed to be an overstatement—the actual savings amounted to just $8 million. Additionally, there is no Republican consensus on whether the government should issue checks from DOGE savings at all. While some conservatives may support tax rebates as a form of financial relief, others may oppose direct payments, preferring alternative methods of reducing government spending.

 

As the debate over DOGE dividends continues, the key question remains: Should government savings be redistributed, and if so, who should benefit? While the proposal promises financial relief for tax-paying households, it also raises concerns about equity and the exclusion of lower-income Americans. With the 2024 election on the horizon, the discussion surrounding this policy could shape broader economic strategies and voter sentiment.