Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP Posting-Version: $Revision: 1.6.2.12 $; site uiucdcs.UUCP Path: utzoo!watmath!clyde!burl!we13!ihnp4!inuxc!pur-ee!uiucdcs!renner From: renner@uiucdcs.UUCP Newsgroups: net.politics Subject: Re: Reagan Hood - (nf) Message-ID: <29200128@uiucdcs.UUCP> Date: Fri, 13-Apr-84 06:53:00 EST Article-I.D.: uiucdcs.29200128 Posted: Fri Apr 13 06:53:00 1984 Date-Received: Sun, 15-Apr-84 08:46:41 EST References: <2000018@iuvax.UUCP> Lines: 79 Nf-ID: #R:iuvax:2000018:uiucdcs:29200128:000:4187 Nf-From: uiucdcs!renner Apr 13 05:53:00 1984 #R:iuvax:2000018:uiucdcs:29200128:000:4187 uiucdcs!renner Apr 13 05:53:00 1984 /**** uiucdcs:net.politics / iuvax!scsg / 6:48 pm Apr 9, 1984 ****/ > The Congressional Budget Office just completed a study based upon the > actual effects of Reagan's economic program. The figures demonstrate > that Reagan's program has indeed given to the rich at the expense of > the poor... Here is how this Robin Hood program for the rich stacks up: > ------------------------------------------------------------------- > Income <$10K $10-20K $20-40K $40-80K >$80K > ------- -------- -------- -------- -------- -------- > Tax cuts $ 20 $ 330 $1200 $3080 $8390 > lost benefits -250 -210 -130 -90 -90 > (cash) > lost benefits -160 - 90 - 60 -80 -40 > (noncash) > ------------------------------------------------------------------- > NET GAIN,LOSS $-390 $30 $1010 $2900 $8270 Unlike some other authors, I am willing to accept these CBO figures at face value. However, the interpretations are suspect. The question here is: do the changes described above represent a system which "takes from the poor and gives to the rich?" I don't have a copy of the CBO report, so I can't tell exactly what the "Income" line and the "lost benefits" lines represent. Because I have to make several assumptions, this analysis is rather shaky compared to my recent articles. Still, let's work some numbers and see what we get. First, we study tax cuts. We compute the average income tax for the adjusted gross income categories above, except that for >$80K we use >$75K. The results are: Income <$10K $10-20K $20-40K $40-80K >$80K ------- -------- -------- -------- -------- -------- Avg.tax (1981) $225 $1576 $4234 $10189 $44461 Tax cuts (from above) 20 330 1200 3080 8390 Remaining tax burden 205 1246 3034 7109 36071 The rich, as we can see, are still paying taxes. Next, we study benefit programs. What I want is the average value of government benefit programs to each of the above income classes. I don't have that specific data, but we can still estimate lower and upper bounds if we assume that low-income families receive more aid than high-income families. (The rich don't get food stamps and Medicaid.) Then I get the following results: Total expenditures on benefit programs in fiscal 1984 (est.) . . . . . . $445,377 million 75% spent on program adminstration, leaving 25% for actual recipients . . . . . $111,344 million divide by 93 million tax returns, plus 10 million that don't file . . . . . . . . $1,081 per household. I take this figure, $1081 per household, as a *lower* bound for low-income families, and as an *upper* bound for high-income families. With it, the tax figures from above, and the CBO figures, I produce the following: Before Reagan | After Reagan <10K >80K | <10K >80K ------ ------ | ------ ------ Average tax paid 225 44,461 | 205 36,071 Average benefit from | govt. support programs 1,391 1,211 | 1,081 1,081 ------------------------ ------ ------ | ------ ------ NET GAIN/LOSS FROM GOVT. +1,116 -43,250 | +876 -34,990 Notice that the poor still get support from the government, and that the rich still pay far more in taxes than they can expect in support. The cash flow is from the rich to the poor, not the other way around. The change is that the government isn't taking quite so much from the rich, and isn't giving quite so much to the poor. This is a very different thing from the "Robin Hood for the rich" claims made by some. CONCLUSION: Claims that the Reagan administration is taking money from the poor and giving money to the rich have no basis in fact. I suspect they are made for their emotional and political impact. Scott Renner {ihnp4,pur-ee}!uiucdcs!renner