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INCOME REDISTRIBUTION. PROBABLY MOST CONTROVERSIAL OF GOVERNMENT FUNCTIONS TRANSFERRING INCOME AND RESOURCES FROM SOME HOUSEHOLDS TO OTHER HOUSEHOLDS INVOLVES MANY PROGRAMS – TOTALLING OVER $1.5 TRILLION ANNUALLY. THE DEBATE.

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Income redistribution
INCOME REDISTRIBUTION

PROBABLY MOST CONTROVERSIAL OF GOVERNMENT FUNCTIONS

TRANSFERRING INCOME AND RESOURCES FROM SOME HOUSEHOLDS TO OTHER HOUSEHOLDS

INVOLVES MANY PROGRAMS – TOTALLING OVER $1.5 TRILLION ANNUALLY


The debate
THE DEBATE

SUPPORTERS: SAY POVERTY IS STILL SIGNIFICANT, AT BETWEEN 15% AND 20%

ALSO SAY INCOME INEQUALITY HAS INCREASED

DETRACTORS SAY PROGRAMS REDUCE “SELF SUFFICIENCY” AND FINANCIAL INDEPENDENCE



Family net worth by percentile of income 2007 000 s
FAMILY NET WORTH BY PERCENTILE OF INCOME “FIFTHS” BY INCOME 2007 $000’S




How measure poverty
HOW MEASURE POVERTY? HIGH SCHOOL DEGREE ANNUAL SALARY

ABSOLUTE POVERTY

RELATIVE POVERTY

INCOME VERSUS CONSUMPTION


How income is redistributed
HOW INCOME IS REDISTRIBUTED HIGH SCHOOL DEGREE ANNUAL SALARY

CASH

TANF: TEMPORARY AID TO NEEDY

FAMILIES

EITC: EARNED INCOME TAX CREDIT

NON-CASH (“IN-KIND”)

FOOD STAMPS, NUTRITION

PROGRAMS, MEDICAID

IS ISSUE LACK OF MONEY, OR

SOMETHING ELSE?


Issues with income redistribution
ISSUES WITH INCOME REDISTRIBUTION HIGH SCHOOL DEGREE ANNUAL SALARY

1. PHASING OUT HELP AS INCOME

RISES – EFFECTIVE “MARGINAL

TAX RATES” CAN BE HIGH

TAXES ON THOSE PROVIDING HELP:

DISINCENTIVES TO WORK?

DOES GOVERNMENT ASSISTANCE

“CROWD OUT” PRIVATE CHARITIES?


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