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The True Levels of Government and Social Expenditures in Advanced Economies

Author

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  • Jacob Funk Kirkegaard

    (Peterson Institute for International Economics)

Abstract
Much of the conventional wisdom concerning social spending is faulty, especially in the United States. Analyses typically focus on readily available information about direct government social expenditures and overlook how tax systems and private spending affect the level of social spending in different societies. By taking the full effects of tax systems and social spending from both private and public sources into account, Jacob Funk Kirkegaard finds that the true level of US social expenditures is fully comparable to European spending—and yet yields worse outcomes than in Europe. Any debate in the United States on social spending should thus focus not on how much is spent but on how and for whose benefit the money is spent. High aggregate social spending in the United States has a very low impact on overall income inequality and healthcare outcomes. Adopting some best practices from other countries in health care could thus led to substantial efficiency gains, not to mention better health outcomes. Lastly, the relatively large scale of tax breaks for social purposes and the associated overall poor social outcomes in the United States indicates an excessively reliance on the tax system to the detriment of fiscal sustainability, transparency, and redistributive fairness. Improving the overall quality of US social spending therefore requires an overhaul of the US tax code.

Suggested Citation

  • Jacob Funk Kirkegaard, 2015. "The True Levels of Government and Social Expenditures in Advanced Economies," Policy Briefs PB15-4, Peterson Institute for International Economics.
    • Handle: RePEc:iie:pbrief:pb15-4
    as

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    File URL: https://www.piie.com/publications/policy-briefs/true-levels-government-and-social-expenditures-advanced-economies
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    References listed on IDEAS

    as
    1. Congressional Budget Office, 2013. "The Distribution of Major Tax Expenditures in the Individual Income Tax System," Reports 43768, Congressional Budget Office.
    2. Congressional Budget Office, 2014. "The Distribution of Household Income and Federal Taxes, 2011," Reports 49440, Congressional Budget Office.
    3. Congressional Budget Office, 2013. "The Distribution of Major Tax Expenditures in the Individual Income Tax System," Reports 43768, Congressional Budget Office.
    4. Jacob Funk Kirkegaard, 2009. "Did Reagan Rule In Vain? A Closer Look at True Expenditure Levels in the United States and Europe," Policy Briefs PB09-1, Peterson Institute for International Economics.
    5. Congressional Budget Office, 2014. "The Distribution of Household Income and Federal Taxes, 2011," Reports 49440, Congressional Budget Office.
    6. Congressional Budget Office, 2013. "The Distribution of Major Tax Expenditures in the Individual Income Tax System," Reports 43768, Congressional Budget Office.
    7. Congressional Budget Office, 2014. "The Distribution of Household Income and Federal Taxes, 2011," Reports 49440, Congressional Budget Office.
    8. Congressional Budget Office, 2013. "The Distribution of Major Tax Expenditures in the Individual Income Tax System," Reports 43768, Congressional Budget Office.
    9. Congressional Budget Office, 2014. "The Distribution of Household Income and Federal Taxes, 2011," Reports 49440, Congressional Budget Office.
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    Cited by:

    1. Christine Mayrhuber & Matthias Firgo & Hans Pitlik & Alois Guger & Ewald Walterskirchen, 2018. "Sozialstaat und Standortqualität," WIFO Studies, WIFO, number 61006, March.

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