Lambert, Peter J.Kim, Kinam, 1970-2007-02-162007-02-162007-02-06https://hdl.handle.net/1794/386930 p.In this study we derive measures of the redistributive effect of taxes and welfare expenditures for the U.S. using CPS data for the years 1994, 1999 and 2004. We find that whilst income inequality increased, the redistributive effect of taxes and public transfers together reduced market income inequality by approximately 30 percent. In 2004, 88 percent of the net redistributive effect resulted from public transfers and 12 percent from taxes. The total redistributive effect would have improved by 35 percent in 2004 if, all else equal, horizontal inequities in taxes and public transfers could have been eliminated.298215 bytesapplication/pdfen-USRedistributive effectDirect taxesPublic transfersInequalityWorking Paper