Redistributive Effect of U.S. Taxes and Public Transfers, 1994-2004

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Redistributive Effect of U.S. Taxes and Public Transfers, 1994-2004

Author Info

Kinam Kim () (Ministry of Health and Welfare, Republic of Korea)
Peter J. Lambert () (University of Oregon Economics Department)

Abstract

In this study we derive measures of the redistributive effect of taxes and welfare expenditures for the U.S. using CPS data for the years 1994, 1999 and 2004. We find that whilst income inequality increased, the redistributive effect of taxes and public transfers together reduced market income inequality by approximately 30 percent. In 2004, 88 percent of the net redistributive effect resulted from public transfers and 12 percent from taxes. The total redistributive effect would have improved by 35 percent in 2004 if, all else equal, horizontal inequities in taxes and public transfers could have been eliminated.

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Paper provided by University of Oregon Economics Department in its series University of Oregon Economics Department Working Papers with number 2007-3.

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Length: 96
Date of creation: 06 Feb 2007
Date of revision: 06 Feb 2007
Handle: RePEc:ore:uoecwp:2007-3

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Find related papers by JEL classification:
D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

This paper has been announced in the following NEP Reports:

NEP-ALL-2007-02-17 (All new papers)
NEP-PBE-2007-02-17 (Public Economics)
NEP-PUB-2007-02-17 (Public Finance)

References listed on IDEAS
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