March 29, 2010

A Little More Redistribution

Kevin Hassett makes some very interesting points in this article in Bloomberg:

.....The U.S. government already spreads the wealth around with abandon. Obama’s efforts are just a continuation and magnification of that lamentable practice.

Look at the health bill. In its use of taxpayer dollars to subsidize insurance for those with lower incomes, it follows many other government policies that steer government spending toward the poor.

In a study published in 2007, the Tax Foundation examined the tax burdens and government spending receipts across income groups. It found that for every dollar it sent to Washington, the lowest quintile of the income distribution received $14.76 in government spending. By comparison, the highest quintile --at that time, those making more than $99,500 -- received just 32 cents for every dollar paid in federal taxes.

........Relying on data from the Tax Policy Center, I looked at how the current system differs from a hypothetical one in which taxes you pay are in proportion to the income you make. My calculations indicate that under current law about 52 percent of the revenue from federal taxes comes from redistributive taxation -- that is, tax rates and policies that don’t apply uniformly to all taxpayers. Under Obama’s proposed 2011 budget, this number increases to about 55 percent. And much of the health-care redistribution doesn’t show up until later.

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