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

Author

Listed:
  • 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.

Suggested Citation

  • Kinam Kim & Peter J. Lambert, 2007. "Redistributive Effect of U.S. Taxes and Public Transfers, 1994-2004," University of Oregon Economics Department Working Papers 2007-3, University of Oregon Economics Department, revised 06 Feb 2007.
  • Handle: RePEc:ore:uoecwp:2007-3
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    File URL: http://economics.uoregon.edu/papers/UO-2007-3_Lambert_Redistributive.pdf
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    Keywords

    Redistributive effect; Direct taxes; Public transfers; Inequality;

    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

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