By Morgan Reynolds
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Additional info for Public Expenditures, Taxes, and the Distribution of Income. The United States, 1950, 1961, 1970
This may reveal the 13 threadbare nature of the case IV counterfactual, but it does emphasize the kinds of normative judgments that become involved in what is conceptually labeled redistribution. " Conclusion 23 Conclusion We have considered four alternative definitions of income redistribution that might be used in empirical studies designed to show the extent to which vertical equity is achieved through government. All definitions are in terms of comparisons of long-run equilibria arising from actual government policies and some specific counterfactual.
340. Obviously the BLS income base, as reported in the original study for 1961 (Tax Foundation 1967), cannot be considered comparable to the income bases used for 1950 (SCF) and 1970 (CPS). 2, the 1961 BLS income dispersion appears suspiciously small. As a remedy for the low dispersion of the 1961 BLS distribution we have substituted the Michigan S C F distribution of households and income for 1961. This appears to be a sensible substitution for a couple of reasons. First, the S C F was the basis for the 1950 study (Conrad 1954) and its use in 1961 continues this practice.
They also vary with current income and other variables, but the life cycle is especially visible in the Social Security 14 case. 14 Of course there are other distributive issues associated with the Social Security system, such as any effect on the rate of aggregate income growth, private savings, interest rates, and so on. Conclusion 25 The exaggerated effect that the age distribution produces in the conventional measure of redistribution by Social Security emerges in the following way: In each year, as measured, cash payments are highly concentrated at the low end of the income distribution.
Public Expenditures, Taxes, and the Distribution of Income. The United States, 1950, 1961, 1970 by Morgan Reynolds
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