wealth redistribution — numbers
In a previous post, I talked about a replacement for our current welfare system:
Tax everyone an equal percentage, then redistribute that wealth as an equal dollar amount paid to everyone.
Here are a few numbers to get a perspective on how this might stack up against the current system.
I should start with a wee disclaimer: I don’t actually have any idea what I’m talking about, I just scoured the web (particularly wikipedia and census.gov) for some basic income, spending, and population numbers.
| Federal spending on medicare, 2007 | $400 billion |
| Federal spending on medicaid, 2007 | $275 billion |
| Federal spending on other unemployment and welfare programs, 2007 | $367 billion |
| Federal spending on social security, 2007 | $586 billion |
| total welfare-related budget, 2007 | $1.6 trillion |
Estimated US population (current): 300 million, or 100 million households
If we do the very simple thing of divvying up that $1.6 trillion amongst everyone equally, we get:
$1.6 trillion / 300 million individuals = $5500 per person per year
or
$1.6 trillion / 100 million households = $16000 per household per year
In 2004, the mean household income was about $60,000 and the median was about $44,000. If I’ve done my math right, after handing out the $16,000 per year, the mean becomes $76,000 and the median becomes $60,000. The difference between the mean and median in percentage terms goes down–which makes sense because the whole point is to flatten out the distribution.
To some of us, an extra $5500 or $16000 doesn’t mean that much. To the poor, it probably means a lot. And for many middle-class folk, just knowing that it’s there could make for a feeling of security–they know if they lose their job they won’t be completely stranded. Which is of course the whole idea of a safety net.
January 2nd, 2008 at 4:30 am
I just would suggest some websites who could be of interest.
http://www.basicincome.org
http://www.usbig.net
Paul
websites
http://www.basicincome.be
http://www.socialcurrency.be
January 8th, 2008 at 8:11 am
I think that that’s a pretty interesting and elegant idea although I would imagine that your numbers are pretty far off. That 1.6 trillion most likely currently goes only to those people who are on welfare whereas under your plan it would be distributed to every person in the country. This makes me think that the poorest people would end up with lessmoney under your plan than currently. Of course that’s only using your very rough figures but it would be interesting to see whether it holds up with more realistic numbers.
January 9th, 2008 at 9:07 pm
What we would all get if we divvied up $1.6 trillion is a pretty straight forward calculation, which I think I’ve done roughly correctly. What you point out, though, is that it’s not clear how much current welfare recipients are getting out of the system. If you take my calculations and adjust the population down to wherever you estimate welfare levels to be, you can get an idea of how much we’re spending per-person. They seem like rather high numbers to me, and I’m skeptical that people on welfare feel that they’re getting that great of a deal.