An analysis of the $340 billion in tax subsidies for housing, education, retirement, and savings in 2013 revealed that the top 1% received about $95 billion compared to the bottom 80% that received $90 billion combined. The top 0.1% of the income scale, who averaged an annual income of $7.6 million, received an average of $33,391 in federal tax cuts. On the other hand, the bottom 60%, who averaged an annual income of less than $65,000, received less than $1,000 on average. Roughly 85% of the 16.4 million Americans who are insured through private health insurance in public markets under the Affordable Care Act receives an average subsidy of $3,960 over the course of a year. Tax programs that do benefit low-income individuals include the earned-income tax credit, which increases the wages of more than 27 million low-income individuals. On the other hand, the article notes that retirement tax spending totaled $146 billion in 2014, and the average benefit for someone in the 1% of incomes was $13,088, while the bottom 60% received $200 or less. What do think of the tax distribution in the United States?
Source: http://www.nytimes.com/2015/03/18/business/economy/taxes-take-away-but-also-give-back-mostly-to-the-very-rich.html?ref=economy
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There is a large literature on this. One is whether these questions are framed appropriately — does looking at absolute dollar amounts make sense? That is, what metrics are meaningful, for which questions. Another is on the equity aspect; there are of course segments of the political scene who argue government is evil and they should pay no taxes. How does the political economy of this play out? The media certainly highlight the mega-rich who are anti-government, which is a self-serving position. So does being antitax correlate with income, despite the low rates paid by the rich? I’ll try to find a recent blog post that discusses formal political economy models of this issue.
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