The oil and gas boom of the past 5 years or so is widely seen as the brightest spot of an otherwise moribund U.S. economy. In fact, a group of economists from Purdue University recently found that without this boom the U...
- Who Pays Taxes and Who Receives Government Spending? An A...
Who Pays Taxes and Who Receives Government Spending? An Analysis of Federal, State and Local Tax and Spending Distributions, 1991-2004
Working Paper No. 1
While the U.S. tax system is progressive, the distribution of government spending makes the overall fiscal system more progressive than is apparent from tax distributions alone. Using a microdata model we estimate the distribution of federal, state and local taxes and spending between 1991 and 2004. We find households in the lowest quintile of income received roughly $8.21 in federal, state and local government spending for every dollar of taxes paid in 2004, while households in the middle quintile received $1.30, and households in the top quintile received $0.41. Overall, tax payments exceeded government spending received for the top two quintiles of income, resulting in a net fiscal transfer of between $1.031 trillion and $1.527 trillion between quintiles. Both taxes and spending appear to have large distributional effects on households, and these effects have grown since 1991. The results suggest tax distributions alone are an inadequate measure of progressivity, and policymakers should examine both tax and spending distributions when judging the overall fairness of policy toward income groups.
Written Testimony of
Scott A. Hodge, President, Tax Foundation
Dynamic Analysis of the Tax Reform Act of 2014
In his best seller, Capital in the Twenty-First Century, Thomas Piketty calls for much higher taxes on upper-income individuals. He recommends a global wealth tax and, for the United States, top income tax...
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