The Reality of Incomes, Taxes and Redistribution in America

Scott LincicomeAs my Cato colleague Chris Edwardsmentioned last week, the Congressional Budget Office on Fridayreleased its annual report on trends in U.S. household income, means ‐​tested transfers, and federal taxes between 1979 and 2017 (the most recent year for which tax data were available). The CBO report is, as usual, chock‐​full of interesting information, but today I’d like to focus on three findings that challenge common claims regarding taxes, middle clas s incomes, and wealth redistribution in the United States.First, and echoing Chris ’ post from last week, the CBO shows that total annual federal taxes — income, payroll, corporate, and excise — paid by the richest Americans (households making around $300,000/year or more) have basically doubled since 1979. Over the same period, the middle classes have paid almost the same a mount of federal taxes, and the poorest Americans’ federal tax burden has all but disappeared.Second, the average value of means ‐​tested transfers (cash payments and in‐​kind benefits from federal, state, and local governments) has increased for all income groups since 1979, but has growndramatically for lower ‐​income Americans:According to the CBO, the significant growth in means ‐​tested transfers between 1979 and 2017 has primarily been driven by (1) expanding eligibility for middle‐​income groups; and (2) spending on Medicaid (“the largest—and fastest growing—means-tested transfer program”) d...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs