NCPA - National Center for Policy Analysis


April 25, 2007

A new study by the Tax Foundation attempts to calculate the benefits of government spending by income quintile in the same way taxes are calculated.  It shows that government spending is also steeply progressive, with those with low incomes receiving far more than those at the top, says economic columnist Bruce Bartlett.

According to the study:

  • Those in the bottom quintile received 33.8 percent of all federal spending in 2004.
  • The second quintile received 21.8 percent.
  • The third quintile received 16 percent.
  • The fourth quintile received 13.4 percent.
  • The top quintile received just 15 percent.

The reason for this, explains Bartlett, is that many of the federal government's largest programs are geared specifically to aid those with low incomes:

  • In the case of Social Security, the benefit formula gives those in the bottom quintile twice as much in benefits at retirement as they paid in taxes during their working lives, according to another CBO study.
  • Those in the top quintile only get back half the taxes they paid. Consequently, the overall Social Security program, looking at both taxes and benefits, is steeply progressive -- a point that is almost always ignored by those who complain about the burden of the payroll tax on the poor.

Source: Bruce Bartlett, "Tax winners and losers,", April 25, 2007; based upon: Andrew Chamberlain, Gerald Prante and Scott A. Hodge, "Who Pays America's Tax Burden, and Who Gets the Most Government Spending?" Tax Foundation, Special Report No. 151, March 26, 2007.

For study:


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