Throughout last year's presidential campaign and continuing through President Obama's first two quarters in office, income redistribution has been a hot-button topic among policymakers, the media, and the general public. The issue was explicitly brought to the forefront of the campaign debate during the now infamous exchange between then-candidate Obama and "Joe the Plumber," who asked why the candidate wanted to tax people like him who own a business that makes $250,000. Obama replied, "... I think when you spread the wealth around, it's good for everybody."
How much should the nation's tax and spending programs move money down the income scale? Unfortunately, the basic questions needed to inform that debate have not been answered: "How much are we actually redistributing right now?" and "How would President Obama's proposals change the amount of redistribution?"
Answering those questions is the purpose of the Tax Foundation's fiscal incidence project, whose initial products are this Special Report and the accompanying working paper. Here we focus on 2012 because that is the first fiscal year (Oct. 1, 2011 - Sept. 30, 2012) during which the full Obama policy agenda is scheduled to be in effect, including his treatment of the expiring Bush tax cuts. That is also the first year in which Obama wants significant tax revenue deposited into his proposed health reform reserve fund. It is also when his climate revenues proposal kicks in. The projected budget deficit for FY 2012 is large, $557 billion, but it is actually much smaller than what the administration's budget predicts for fiscal years 2009 and 2010, both of which exceed $1 trillion.
Download full pdf publication | Link to the Tax Foundation
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