In one of their excellent series of articles in The Wall Street Journal, Phil Gramm and John notice in advance Traditional income inequality figures report income distribution Before taxes and transfers. After taxation and transfer, income inequality will be flat or reduced, depending on your starting point.
| Source: Phil Gram and John Al in The Wall Street Journal |
If your game is to fight for more taxes and transfer payments to solve the problem of income inequality, it will be a playboy’s choice, because there are not many taxes and transfer payments that can improve the measured problem!
Now, facts are facts, and this fact has a good gradual explanation: However, due to our rapidly progressive tax system and interests, unrestricted capitalism will lead to a sharp increase in inequality.The numbers don’t mean more Redistribution, but they are consistent with the statement that only our current massive redistribution saves us from the first two lines.
Gramm and Early said this, it’s worth stopping to think:
With the surge in government transfer payments to low-income families, their labor force participation rate has dropped sharply, and the income percentage of the lowest quintile of the population paid by the government has risen to more than 90%.
The main force behind the pre-tax and pre-transfer figures is the decline in the labor force participation rate of low-income groups. Some causal relationships are not completely impossible, but have to go through a larger gain (earning one dollar, losing one dollar of gain) through a means-tested, and then exit the labor market, not the other way around.
The second clause is very enlightening. Among the bottom fifth of the population in the United States, 90% of income earners come from the government.
Of course, there are more issues to be dissolved. The family composition and demographic structure have changed. The issue of consumption inequality is not related to income inequality. The relative prices of the goods people buy are different-the prices of goods are cheaper, the prices of services are higher, the prices in CA and other cities and states are higher, etc. Wait. However, so many debates are based on such obvious flaws and it is worth remembering.
By the way, this is not easy. Because the tax law is deliberately complicated, so is the nature of the transfer.
The Census Bureau’s income data failed to count two-thirds of all government transfers (including medical insurance, Medicaid, food stamps, and about 100 other government transfers) as income to recipients.
These include income tax credits, where beneficiaries receive checks from the Ministry of Finance; food stamps, which allow beneficiaries to use government-issued debit cards to purchase food; and many other programs in which the government pays directly for the proceeds.
I have not studied these methods. How do you calculate the services provided by housing, medical care, VA care, etc.?
Convenient figures, in addition to the above 90%:
In 2017, federal, state, and local governments redistributed $2.8 trillion, accounting for 22% of American household income.
Americans pay $4.4 trillion in federal, state, and local taxes each year. Households in the top quintile of households pay 82% of the tax
