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May 01, 2007

Net tax burdens

It’s a fact of economic life that government both taxes and gives: Government takes through taxes, but government gives through its spending on programs and other activities. A new economic study sorts out who comes out ahead and who doesn’t. N.C. State University’s Mike Walden explains.

“This is a real interesting question … and it is one that … economists have been asking for a long time. And we actually have a new study from the nonpartisan, nonprofit Tax Foundation that tries to sort this out,” says Dr. Walden, an extension economist.

“They went through a lot of data -- and I won’t go into the details of what they did -- to try to sort this out, looking at what people at different income levels pay in taxes versus what those same people in different
Income levels get back from government programs, programs like social security, Medicare and Medicaid and other assistance programs,” he explains. “And I think what they found conforms to our common sense but at least we got some numbers here.

“What they found is that the lowest income households get a lot more back than they pay. In fact they get about $8 back in terms in services for every dollar in taxes they pay. Middle income -- households almost a wash. They get back a little more -- about $1.30 to $2 for every dollar they pay in taxes,” he adds.

“Upper income households, however, are net payers to the government. They get back 40 cents for every dollar they pay in taxes.

“And this should make sense,” Walden concludes because a big part of what government does is redistribute income.”

Posted by deeshore at May 1, 2007 09:12 AM