The Distributional Effects of Fiscal Policy (VIDEO)
The Brookings Institution and The Fletcher School, Tufts University
In this video, William G. Gale of The Brookings Institution, and EconoFact co-founder Michael Klein discuss the distributional effects of fiscal policy and the progressivity of the US tax system.
The combination of tax and spending policies in the United States is progressive - but less so than in major European countries.
What this Means:
Fiscal policy plays a role in income redistribution. This occurs through spending, by apportioning funds to programs like Social Security, the Supplemental Nutritional Assistance Program (food stamps), and housing assistance, for instance. But taxes also play a role. The share of income that you pay in taxes goes up as your income goes up, for example. Nonetheless, the overall progressivity of fiscal policy in the United States is relatively low as compared to other countries with similar levels of income.