Families earning just above the average national income get almost exactly the same amount in benefits and public services as they pay in taxes, according to a new report.
Its author David Green, from the thinktank Civitas, said families bringing home £25,104 - just above the average income of £25,000 - received average benefits of £4,363 while paying direct taxes of £5,620.
They also paid on average £4,742 in indirect taxes, including VAT, while receiving state services, such as education and NHS treatment, valued at £6,140. That means their benefits are worth £141 more than they pay in tax.
The report, entitled Individualists Who Co-operate, argues the Government should let people keep their original income and decide how to spend their money themselves.
Mr Green said higher government spending did not necessarily lead to improved standards in schools or hospitals.
He said: "The idea that higher spending is the key to improving standards has been tested to destruction since 1997. The underlying problem is not that any particular leader or political party has failed but that the state has strayed beyond the capabilities of any system of central administration."
He added that the number of people receiving more in cash benefits than they pay in taxes has risen from 35% in 1979 to 45% in 2008.
The report calls for the end of taxation of interest on savings and the scrapping of the working tax credit, as well as the creation of family trust funds to encourage people to save for the future.
Mr Green said: "People who work hard and pay their taxes are the backbone of society. When political parties praise 'hard-working families', as they now all do, they acknowledge this basic reality.
"However, the continued willingness of hard-working people to go on paying taxes depends on an implicit contract between them and the recipients of welfare benefits. There must be reciprocity."
