TRANSFER PAYMENTS. Assignment Help & Writing Service


Industrialized countries have made a good- deal of ,progress in terms of spreading prosperity. In the United States, for instance, as recently as 1959, nearly a quarter of the population (22.8 percent) were .classed as living in poverty, compared to 6.7 percent in 1979 [Smeeding,' 1982, p. '96], yet several million people are still poor, and the number grows in economically depressed times such as the early 19805. . The proportion of the national income received by the bottom 20 percent of the population has hovered around 5 percent for several decades, but this figure takes no account of transfer payments=called this because the intent of these payments is to transfer resources from the more affluent to the needy (financed mainly through progressive income taxes-upon the more affluent; see Table 154). Such payments include-both money and noncash items such as, food stamps, subsidized housing and Medicare. The non- ~onetary payments  increased dollars) from $2.billion m 1965 to over $27 million in 1980 [Smeeding, 1982, p. 3].

It should be observed that the affluent as well as the poor receive government payments. These come in such forms as subsidized higher education (used mainly by the middle and upper classes), income tax exemptions for interest paid on housing, FHA loans, and even Coast Guard rescue operations and harbor maintenance For years American was regarded as he land for private boats and yachts. The total amount of equality because of the possibility of .a of subsidies to the non poor is somewhat "rags-to-riches" mobility. This concept has greater than to the poor [Smeeding, 1982, p. been challenged by various writers [Rawls, 9]. However, the poor receive a larger pro- 1971; Jencks, 1972, 1979; Shostak et, 1973] portion of their income in a variety of trans-: who insist that what matters is not equality far payments and pay less in taxes. One . of opportunity but equality of results. estimate is that, in 1977, the net effect of The moral case for equality of income is transfer payments and taxes increased the well stated by Tumin [1963, p. 26]. Most income of the lowest 10 percent of the pop- already agree that inheritance of wealth alone elation by 55 percent. In the same year, they should not guarantee a life of luxury to some decreased the income of the top 20 percent while condemning' others to lifelong hard by 15 percent [Meerman, 1980, p. 1247]. ship. We have, therefore, accepted the idea The combined effects of taxes and transfer of equality of opportunity. A meritocracy payments have significantly reduced the gap would mean that equality of opportunity between the rich and the poor. Without trans- would replace an aristocracy of inherited wealth fer payments (including both cash and in- with an aristocracy of inherited talent. Is it kind), those in poverty in 1980, instead of really any more just to give wealth and status being 6 or 7 percent of our people, would to those who pick smart parents than to those have been 22 percent-nearly four times as who pick rich parents? great [Murray, 1982, p. 10). The Reagan While the moral case for equality of come administration reduced the amount of income is easily made, the attainment of equality , redistribution, cutting the level of transfer poses many difficulties. For example, the. payments to the poor and cutting taxes most many . kinds of help given by parents to greatly upon the larger incomes. A Congress children are a major source of inequality. The signal Budget Office calculation put the 'net mere fact of having parents, who are hard effect of the 1981 Reagan administration tax working, successful, self-confident, and veranda budget changes (if fully implemented) at bally facile gives children a competitive adman average loss of $240 for households under vantage: Is there any possible way to change $10,000 in income and a gain of $15,130 for this?

Share This