How much is almost immediately channeled back into other hands. I’d argue almost all the aid to poor people comes with strings that indirectly, but strongly benefit wealthy people.

Food stamps for example amount to a subsidy for grocery stores. Section 8 a subsidy for rapacious landlords etc.

The poor clearly benefit from this in some fashion, but so do the wealthy, and in a far more direct fashion then “social order” (though that too is extremely important).

From another tack, what does a low tax rate get you. The super rich have more income then anyone could ever need. Past a certain threshold the “worth” of money changes. It becomes a “way to keep score”, “a stepping stone to immortality”, “a tool for social power” or some other such use. Taxation often has little impact on these non monetary goals. When you already have more then you will ever need, what good does accumulating even more do you?

Barbar: That this statistic is routinely trotted out without the obvious accompaniment (the % of income or wealth belonging to the top 1%) irks me greatly.

It’s a delicious cycle, as follows. The wealthy pay a high proportion of total tax receipts. Therefore their tax rate is too high. Reduce the taxes on the wealthy. Observe as they accrete more and more wealth. Then note that they pay a high proportion of total tax receipts. Delicious!

Y’know, I remember reading about Bartels’s research, and seeing some reactions along the lines of “In Other News: Water May Be Wet”. Because, of course, it’s blindingly obvious that legislators serve their wealthiest constituents first, the middle class maybe, and the poor ones not at all, and you’d have to be dumb as a sack of rocks to think otherwise. But, as we’ve seen here, Bartels’s study is instrumental in responding to rock-sacks like Samuelson.

Chapter 4 of this report – which I wrote while working at the OECD – finds that the USA has the most progressive system of direct taxes (federal and state income taxes and employee social security taxes, but not employer social security taxes or indirect taxes) in the OECD, and the richest 10% of US households (in terms of disposable income adjusted for household size) pay 45% of direct taxes, also the highest share in the OECD. Even after adjusting for the fact that the richest 10% of US households have one of the highest shares of income, the system of direct taxes remains the most progressive in the OECD.

There are a number of other countries where the richest 10% pay a higher share of their incomes in taxes, but in these countries the poor and the middle class also pay a significantly higher share of their incomes in taxes, so that in these countries the tax systems are not as progressive as in the USA.

BUT —- One point to note is that progressivity describes the structure of taxes and benefits, but redistribution is determined both by the progressivity of taxes and benefits and the level of taxes and benefits. For example, a more progressive tax system may redistribute less than a less progressive system if the level of taxes is substantially lower.

In fact, the US even has the most redistributive system of direct taxes – that is, the direct tax system in the US reduces income inequality (not wealth) by more than any other country.

The report also points out that the USA is the only OECD country which redistributes more through the tax system than through the system of cash benefits.

What this mean of course is that other countries reduce inequality more through paying social security and other benefits than through taxes.

The other half of the equation is that the USA redistributes less through social security and unemployment payments etc. than most other countries. Also most but not all other countries support families with children through cash benefits, whereas the USA mainly does this through the tax system.

What is happening is that the US provides more social welfare through the tax system than most other countries, but relatively little social welfare through the social welfare system. (In passing, Germany and France also provide a lot of welfare support through the tax system.)

Even though the US social security system overall is about average in progressivity, the overall redistributive effect is lower mainly because most other countries spend a lot more through their social security systems than the US.

So when you look at the combined effect of taxes and benefits overall the USA redistributes significantly less than most other OECD countries, despite the fact that it has the most progressive system of direct taxes.

The USA also starts off with one the highest levels of earnings inequality among OECD countries, so that when you look at household incomes “after” taxes and benefits, the USA is the fourth most unequal country in the OECD - after Mexico, Turkey and Portugal.

Since everybody pays social security/medicare taxes, but only on the first $102,000 ($106,800 in 2009), this means the richest pay a very low percentage of their income to these taxes. If your figures are true, it points to a really huge imbalance of wealth.

Isn’t George Mason primarily funded by the state?

The “average tax rate in 2006 for the top 1%, based on adjusted gross income, was 22.8%,” down from “28.9% in 1996, and…24% in 1988″:

http://online.wsj.com/article/SB121677287690575589.html?=special_page_campaign2008_leftbox

What amazes me about this line of criticism of the GMU economics (which seems to be trotted out fairly often) is that its proponents are never consistent in its application. If the GMU economists are biased towards the wealthy because their primary funding comes from wealthy people, what can we say about the bias of (the large numbers of) other economists whose primary funding comes from the state…?

The average “effective tax rate” for the top 1 percent is around 22 percent.

Also, many people pay more in payroll taxes than income taxes

Given that it’s less then six weeks since a prominently publicised celebration of democracy was held throughout the country, he might perhaps have devoted a sentence or two to disabusing the handful of naive WP readers who might still imagine, on the basis of high school civics lessons, that voting made some difference to political outcomes.