July 21, 2009
"Obama takes first step to redistribute wealth"
By David R. Francis
President Obama's budget aims to change that, modestly. The top 1 percent of families would lose some 3 percent of their present share of income by 2012, according to a study by economists at the business-friendly Tax Foundation. That still leaves the top 1 percent way ahead in their share of total income than in any year under President Reagan, who pushed tax cuts for the rich in the 1980s as a way to boost economic growth.
That would cut the income for the top 1 percent an average of $64,000 per household, to a bit more than $2 million by 2012, the Tax Foundation study found. The Obama budget does make for "more even distribution of the economic pie," the study concluded. Even this modest adjustment may be difficult to get past Congress. "Send reinforcements," reportedly joked Jared Bernstein, a liberal redistributionist now at the White House.
The Tax Foundation study is unusual in that it looks at both tax and spending redistribution effects of federal actions. That requires some bold assumptions. For example, defense spending is assigned to each income group in proportion to the income of that group. The rich are assumed to benefit more because they have more to protect.
Optimal redistribution is in the eye of the beholder, says Gerald Prante, an author of the study.