IDEAS home Printed from https://ideas.repec.org/a/sae/pubfin/v37y2009i1p3-26.html
   My bibliography  Save this article

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

Author

Listed:
  • Kinam Kim

    (Ministry for Health, Welfare and Family Affairs, Republic of Korea)

  • Peter J. Lambert

    (University of Oregon)

Abstract

In this study, the authors derive measures of the redistributive effect of taxes and welfare expenditures for the United States using Current Population Survey data for the years 1994, 1999, and 2004. The authors find that while 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 horizontal inequities in taxes and public transfers could have been eliminated.

Suggested Citation

  • Kinam Kim & Peter J. Lambert, 2009. "Redistributive Effect of U.S. Taxes and Public Transfers, 1994-2004," Public Finance Review, , vol. 37(1), pages 3-26, January.
    • Handle: RePEc:sae:pubfin:v:37:y:2009:i:1:p:3-26
    DOI: 10.1177/1091142108324423
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/1091142108324423
    Download Restriction: no
    File URL: https://libkey.io/10.1177/1091142108324423?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Ximing Wu & Jeffrey M. Perloff & Amos Golan, 2006. "Effects Of Government Policies On Urban And Rural Income Inequality," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 52(2), pages 213-235, June.
    2. repec:bla:obuest:v:63:y:2001:i:3:p:381-94 is not listed on IDEAS
    3. Jin Kwon Hyun & Byung-In Lim, 2005. "Redistributive effect of Korea's income tax: equity decomposition," Applied Economics Letters, Taylor & Francis Journals, vol. 12(3), pages 195-198.
    4. Pernia, Ernesto & Kakwani, Nanak, 2000. "What is Pro-poor Growth?," MPRA Paper 104987, University Library of Munich, Germany.
    5. Richard V. Burkhauser & Timothy M. Smeeding & Joachim Merz, 1996. "Relative Inequality And Poverty In Germany And The United States Using Alternative Equivalence Scales," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 42(4), pages 381-400, December.
    6. Cutler, David M & Katz, Lawrence F, 1992. "Rising Inequality? Changes in the Distribution of Income and Consumption in the 1980's," American Economic Review, American Economic Association, vol. 82(2), pages 546-551, May.
    7. repec:bla:econom:v:63:y:1996:i:250:p:s141-62 is not listed on IDEAS
    8. Kakwani, Nanok C, 1977. "Measurement of Tax Progressivity: An International Comparison," Economic Journal, Royal Economic Society, vol. 87(345), pages 71-80, March.
    9. Wagstaff, Adam & van Doorslaer, Eddy & van der Burg, Hattem & Calonge, Samuel & Christiansen, Terkel & Citoni, Guido & Gerdtham, Ulf-G. & Gerfin, Michael & Gross, Lorna & Hakinnen, Unto, 1999. "Redistributive effect, progressivity and differential tax treatment: Personal income taxes in twelve OECD countries," Journal of Public Economics, Elsevier, vol. 72(1), pages 73-98, April.
    10. repec:bla:econom:v:64:y:1997:i:254:p:233-44 is not listed on IDEAS
    11. Justin Van De Ven & John Creedy & Peter J. Lambert, 2001. "Close Equals and Calculation of the Vertical, Horizontal and Reranking Effects of Taxation," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 63(3), pages 381-394, July.
    12. Aronson, J Richard & Johnson, Paul & Lambert, Peter J, 1994. "Redistributive Effects and Unequal Income Tax Treatment," Economic Journal, Royal Economic Society, vol. 104(423), pages 262-270, March.
    13. Chernick, Howard, 2005. "On the Determinants of Subnational Tax Progressivity in the U.S," National Tax Journal, National Tax Association;National Tax Journal, vol. 58(1), pages 93-112, March.
    14. Ivica Urban & Peter J. Lambert, 2008. "Redistribution, Horizontal Inequity, and Reranking," Public Finance Review, , vol. 36(5), pages 563-587, September.
    15. Wallace E. Oates, 2006. "On the Theory and Practice of Fiscal Decentralization," Working Papers 2006-05, University of Kentucky, Institute for Federalism and Intergovernmental Relations.
    16. Edward N. Wolff & Ajit Zacharias, 2007. "The Distributional Consequences Of Government Spending And Taxation In The U.S., 1989 And 2000," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 53(4), pages 692-715, December.
    17. Willem Adema & Maxime Ladaique, 2005. "Net Social Expenditure, 2005 Edition: More Comprehensive Measures of Social Support," OECD Social, Employment and Migration Working Papers 29, OECD Publishing.
    18. Plotnick, Robert, 1981. "A Measure of Horizontal Inequity," The Review of Economics and Statistics, MIT Press, vol. 63(2), pages 283-288, May.
    19. Lambert, Peter J, 1985. "On the Redistributive Effect of Taxes and Benefits," Scottish Journal of Political Economy, Scottish Economic Society, vol. 32(1), pages 39-54, February.
    20. Jenkins, Stephen, 1988. "Reranking and the Analysis of Income Redistribution," Scottish Journal of Political Economy, Scottish Economic Society, vol. 35(1), pages 65-76, February.
    21. Weingast, Barry R & Shepsle, Kenneth A & Johnsen, Christopher, 1981. "The Political Economy of Benefits and Costs: A Neoclassical Approach to Distributive Politics," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 642-664, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ivica Urban, 2014. "Contributions of taxes and benefits to vertical and horizontal effects," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 42(3), pages 619-645, March.
    2. Branko Milanovic & Sean Higgins & Nora Lustig & Whitney Ruble & Timothy M. Smeeding, 2016. "Comparing the Incidence of Taxes and Social Spending in Brazil and the United States," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 62, pages 22-46, August.
    3. Peter Lambert & Thor Thoresen & Runa Nesbakken, 2010. "On the Meaning and Measurement of Redistribution in Cross-Country Comparisons," LIS Working papers 532, LIS Cross-National Data Center in Luxembourg.
    4. Abu-Zaineh, Mohammad & Mataria, Awad & Luchini, Stéphane & Moatti, Jean-Paul, 2009. "Equity in health care finance in Palestine: The triple effects revealed," Journal of Health Economics, Elsevier, vol. 28(6), pages 1071-1080, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ivica Urban, 2009. "Kakwani decomposition of redistributive effect: Origins, critics and upgrades," Working Papers 148, ECINEQ, Society for the Study of Economic Inequality.
    2. Ivica Urban, 2014. "Contributions of taxes and benefits to vertical and horizontal effects," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 42(3), pages 619-645, March.
    3. Liu Baihui, 2017. "Redistributive Effect of Taxes and Transfers: Evidence from China," Journal of Tax Reform, Graduate School of Economics and Management, Ural Federal University, vol. 3(1), pages 43-51.
    4. Ivica Urban & Peter J. Lambert, 2008. "Redistribution, Horizontal Inequity, and Reranking," Public Finance Review, , vol. 36(5), pages 563-587, September.
    5. Mario Morger & Christoph A. Schaltegger, 2018. "Income tax schedule and redistribution in direct democracies – the Swiss case," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 16(3), pages 413-438, September.
    6. Peter J. Lambert, 2004. "Income Taxation and Equity," Working Papers 2004/4, Institut d'Economia de Barcelona (IEB).
    7. van Doorslaer, Eddy & Wagstaff, Adam & van der Burg, Hattem & Christiansen, Terkel & Citoni, Guido & Di Biase, Rita & Gerdtham, Ulf-G. & Gerfin, Mike & Gross, Lorna & Hakinnen, Unto, 1999. "The redistributive effect of health care finance in twelve OECD countries," Journal of Health Economics, Elsevier, vol. 18(3), pages 291-313, June.
    8. Nicolas Herault & Stephen P. Jenkins, 2021. "Redistributive effect and the progressivity of taxes and benefits: evidence for the UK, 1977–2018," Working Papers 592, ECINEQ, Society for the Study of Economic Inequality.
    9. Nolan, Matt, 2018. "Horizontal and Vertical Equity in the New Zealand Tax-Transfer System: 1988-2013," Working Paper Series 7657, Victoria University of Wellington, Chair in Public Finance.
    10. Levy, Horacio & Nogueira, José Ricardo & Siqueira, Rozane Bezerra & Immervoll, Herwig & O'Donoghue, Cathal, 2010. "Simulating the impact of inflation on the progressivity of personal income tax in Brazil," Revista Brasileira de Economia - RBE, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil), vol. 64(4), December.
    11. Herault, Nicolas & Jenkins, Stephen P., 2023. "Redistribution, horizontal inequity, and reranking: direct taxation in the UK, 1977–2020," LSE Research Online Documents on Economics 120996, London School of Economics and Political Science, LSE Library.
    12. Hérault, Nicolas & Jenkins, Stephen P., 2021. "Redistributive effect and the progressivity of taxes and benefits: evidence for the UK, 1977-2018," GLO Discussion Paper Series 967, Global Labor Organization (GLO).
    13. Stefano Boscolo, 2020. "On the Horizontal Inequity Effect of the Erosion of the PIT Base: The Case of Italy," Department of Economics 0176, University of Modena and Reggio E., Faculty of Economics "Marco Biagi".
    14. Stefano Boscolo, 2021. "On the horizontal inequity effect of the erosion of the pit base: the case of Italy," Politica economica, Società editrice il Mulino, issue 1, pages 43-82.
    15. Peter Lambert & Thor Thoresen & Runa Nesbakken, 2010. "On the Meaning and Measurement of Redistribution in Cross-Country Comparisons," LIS Working papers 532, LIS Cross-National Data Center in Luxembourg.
    16. Ewa Aksman, 2008. "Wpływ podatku dochodowego od osób fizycznych w Polsce na dobrobyt społeczny," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 1-2, pages 77-90.
    17. Essama-Nssah, B., 2008. "Assessing the redistributive effect of fiscal policy," Policy Research Working Paper Series 4592, The World Bank.
    18. Justin Van De Ven & John Creedy, 2005. "Taxation, Reranking and Equivalence Scales," Bulletin of Economic Research, Wiley Blackwell, vol. 57(1), pages 13-36, January.
    19. Nicolas Hérault & Stephen P. Jenkins, 2023. "Redistribution, horizontal inequity, and reranking: Direct taxation in the UK, 1977–2020," Working Papers 660, ECINEQ, Society for the Study of Economic Inequality.
    20. Bilger, Marcel, 2008. "Progressivity, horizontal inequality and reranking caused by health system financing: A decomposition analysis for Switzerland," Journal of Health Economics, Elsevier, vol. 27(6), pages 1582-1593, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:pubfin:v:37:y:2009:i:1:p:3-26. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.