Friday, December 6, 2013

U.S. Welfare Redistributes Over $2 Trillion from the Top 40 Percent of Families to the Bottom 60 Percent

  • The question of who benefits from government spending is just as important as the question of who pays taxes. In other words, how do tax and spending policies redistribute income?
  • American’s lowest-income families receive $5.28 worth of government spending (federal, state, and local) for every $1 they pay in total taxes. Middle-income families receive $1.48 in total spending per tax dollar, while America’s highest-income families receive $0.25 cents in spending for every dollar of taxes paid.
  • As a group, the bottom 60 percent of American families receive more back in total government spending than they pay in total taxes.
  • Government tax and spending policies combine to redistribute more than $2 trillion from the top 40 percent of families to the bottom 60 percent.
  • The total amount of redistribution has increased slightly over the past 12 years. Middle-income and working lower-income families were the biggest beneficiaries. 
Source: Gerald Prante and Scott A. Hodge, "The Distribution of Tax and Spending Policies in the United States," Tax Foundation, November 8, 2013.