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

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

Peter J. Lambert

University of Oregon

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.

Key Words: redistributive effect • vertical equity • horizontal inequity • reranking

This version was published on January 1, 2009

Public Finance Review, Vol. 37, No. 1, 3-26 (2009)
DOI: 10.1177/1091142108324423


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