We are familiar with the Obama administration's push to raise taxes on “the wealthy,” and specifically his insistence on repealing some of the income tax cuts instituted in George W. Bush's Presidency. So I was surprised, in the process of looking at other blogs this morning and following links from blog to blog, to find a blog called “SayAnythingBlog.com,” on which a posting, by Rob Port, appeared today called “Social Security And Medicare Doing More To Promote Income Inequality Than The Bush Tax Cuts.” In it I read that:
In fact, the blog post summarizes this effect:
Interesting. Now I am one of those “old people,” receiving Social Security and Medicare benefits, though I am hardly affluent. (The Clinton presidency impoverished me — he canceled the Strategic Defense Initiative, alias “Star Wars,” which funded the job I was working at in 1994; from 1994 to 1998 I was unemployed, unable to get a job, and since then I've never had the kind of good jobs I'd had in the years prior to 1994, though I've managed to get out of total poverty into a more “normal” existence.) But I imagine there are “affluent” Social Security and Medicare benefit recipients, so I cannot argue with Port's posting. Do you think anyone can enlighten those Democrats who insist that “the ‘Bush tax cuts’ must go”?
…House Budget Committee Chairman Paul Ryan, in a 17-page paper based largely on a Congressional Budget Office analysis of income trends between 1979 and 2007, has [made the case that the Republican proposals would better address income inequality than the Democrats'].
Ryan, a Republican from Wisconsin, makes the point that the government redistributes income not only through taxes but also through transfer payments, including Social Security, Medicare, food stamps, and unemployment benefits. The CBO study helpfully measures income, adjusted for inflation, after taxes and after such transfer payments.
Many may find the results of the CBO study surprising. It turns out, Ryan reports, that federal income taxes (including the refundable Earned Income Tax Credit) actually decreased income inequality slightly between 1979 and 2007, while the federal payroll taxes that supposedly fund Social Security and Medicare slightly increased income inequality. That’s despite the fact that income tax rates are lower than in 1979 and payroll taxes higher.
Perhaps even more surprising, federal transfer payments have done much more to increase income inequality than federal taxes. That’s because, in Ryan’s words, “the distribution of government transfers has moved away from households in the lower part of the income scale. For instance, in 1979, households in the lowest income quintile received 54 percent of all transfer payments. In 2007, those households received just 36 percent of transfers.”
In fact, the blog post summarizes this effect:
In effect, Social Security and Medicare have been transferring money from low-earning young people (who don’t pay income taxes but are hit by the payroll tax) to increasingly affluent old people.
Interesting. Now I am one of those “old people,” receiving Social Security and Medicare benefits, though I am hardly affluent. (The Clinton presidency impoverished me — he canceled the Strategic Defense Initiative, alias “Star Wars,” which funded the job I was working at in 1994; from 1994 to 1998 I was unemployed, unable to get a job, and since then I've never had the kind of good jobs I'd had in the years prior to 1994, though I've managed to get out of total poverty into a more “normal” existence.) But I imagine there are “affluent” Social Security and Medicare benefit recipients, so I cannot argue with Port's posting. Do you think anyone can enlighten those Democrats who insist that “the ‘Bush tax cuts’ must go”?
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