Scott Hodge: Here’s What ‘Income Equality’ Would Look Like – WSJ.com

2014

I’m not going to comment on this, but if you are interested in the inequality debate, this article contains some eye opening facts.

President Obama has talked a lot recently about reducing income inequality. Yet he neither acknowledges how much money the government is redistributing, nor how much more would be needed to close the income gap. Perhaps that’s because the project would require redistribution on a staggering scale.

That’s the upshot of two separate studies published in November 2013 by the Congressional Budget Office and the Tax Foundation. While they used slightly different methodologies, each study measured the amount of existing redistribution by the federal government—by comparing how much Americans get back in total federal spending (everything from transfer programs to national defense) to how much they pay in all federal taxes (everything from income taxes to excise taxes). Both studies show that the federal tax-and-spending system already is extremely progressive and redistributive.

Looking at prerecession data for non-elderly households in 2006 in “The Distribution of Federal Spending and Taxes in 2006,” the CBO found that those in the bottom fifth, or quintile, of the income scale received $9.62 in federal spending for every $1 they paid in federal taxes of all kinds. This isn’t surprising, since people with low incomes pay little in taxes but receive a lot of transfers.

via Scott Hodge: Here's What 'Income Equality' Would Look Like – WSJ.com.