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The Federal Government Redistributes $1.5 Trillion of Income

1 min readBy: Scott Hodge, Andrew Lundeen

American families can be broken down into two groups—those that get more back in spending than they pay in total taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. es and those that pay more in taxes than they get back in spending. When we compare the two groups, we find that federal tax and spending policies combine to redistribute more than $1.5 trillion in income from the top 40 percent of American families to the bottom 60 percent.

More than half of this total ($849 billion) goes to the lowest-income families, while another $453 billion flows to the working poor. Middle-income families as a group receive $225 billion in redistributed income from upper-income Americans. The vast majority of this redistributed income is taken from the top 20 percent of families—those earning over $119,698. Of this amount, nearly $650 billion (or 40 percent) is taken from families in the top 1 percent.

These findings come from our new report, The Distribution of Tax and Spending Policies in the United States. Read more here and here.

For more charts like the one above, see the second edition of our chart book, Putting a Face on America's Tax Returns.