Income Redistributive Effects of State and Local Fiscs: Connecticut,a Case Study

Abstract

Regardless of the alternative assumptions used to allocate taxes and benefits from expenditures of Connecticut state and local governments in 1967, this study shows that the incidence of taxes is regressive while that of expenditures is progressive. The regressivity of the tax structure is overwhelmingly due to the regressivity of the property tax. Progressivity of expenditures stems chiefly from transfer payments, housing, and hospitals which benefit primarily low-income families. On the basis of reasonable assumptions, it is shown that the state and local fiscs bring about, on the average a net redistribution of a mere two percent of income from families with annual incomes of $12,000 and above to those below that level.

Get full access to this article

View all access options for this article.

References

Aaron

McGuire

(1970) “Public goods and income distribution.” Econometrica 6 (November): 907–920.

Eapen

A. T.

Eapen

A. N.

(1970) Incidence of Taxes and Expenditures of Connecticut State and Local Governments, Fiscal Year 1967. Hartford: Connecticut State Revenue Task Force.

Gillespie

W. I.

(1966) The Incidence of Taxes and Public Expenditures in the Canadian Economy. Ottawa: Queen's Printer.

Gillespie

W. I.

(1965) “Effect of public expenditures on the distribution of income,” in Musgrave

R. A.

(ed.) Essays in Fiscal Federalism. Washington, D.C.:Brookings Institution.

Musgrave

R. A.

Daicoff

D. W.

(1958) “Who pays Michigan taxes.” Michigan Tax Study Staff Papers, Lansing.

Neenan

W. B.

(1970) “Suburban-central city exploitation thesis: One city's tale.” National Tax J. (June): 117–139.

U.S. Bureau of the Census (1966) “Commodity transportation survey, parts 3 and 4,” volume 3 of the Census of Transportation, 1963. Washington, D.C.: Government Printing Office.

U.S. Department of Commerce (1953) Income Distribution in the United States, by Size, 1946–1950. Washington, D.C.

U.S. Department of Labor (1966) “Consumer expenditures and income, total northeast region, urban and rural, 1960–61.” BLS Report 237–89, Supplement 3, Part A, May.