September 12th, 2011
In a recent issue of the journal International Tax and Public Finance is a paper worth reading is higher in the U.S. than in Germany.This result is relative, however, when the international transfer of such data as a basis, from which payments are calculated out to finance medical treatments.Although the U.S. is then still above the European average. In Germany, however, the transfers to the poor then a quarter higher than in the U.S., Ireland, Austria and Belgium are more generous than we are. The European average, according to press down on the other hand, especially countries like Italy, Greece and – surprisingly – the Netherlands, which holds the common prejudice is still a fairly comfortable welfare state.
Healthcare in the U.S. is medically excellent, but also notoriously expensive. Since the poor even before the recent U.S. health reform on government programs like Medicare and Medicaid could receive a tax-financed health care, these transfers are particularly significant. When comparing the countries is given also that the primary income distribution is more dispersed in the U.S. than in many European countries. Individuals who are relatively poor for the rest of the population may, therefore, despite a higher absolute transfers in the U.S. have a lower disposable incomes than in Europe – simply because their output level is less.
As interesting as the international comparisons are, therefore, one must be so careful when interpreting the results. Less problematic, however comparisons of transfers to different income groups within a country. Here again, the paper of Collado and Iturbe-Ormaetxe interesting insights.
Let us look for example at the average cash transfers to those households whose main income earners under 65 years, so that the state pension system is largely sidelined. This is reasonable because retirees often receive a market income of zero or near zero, so statistically among the poorest individuals initially would. Statistically, they are poor but qua system – have no statutory pay-as most of them accumulated private savings and were not poor in the statistical sense. So you can see on these transfers, it is clear that in Germany the highest income quintile relates per capita is only about one sixth less than the lowest income quintile transfers. Income received between the layers, amazingly, even a little less. The advantage of the lowest quintile also melts together further, if the statutory health insurance into consideration moves.
This pattern proves to be very robust. It is found not only in Germany but also in other EU-15 countries and the USA. Even the inclusion of households whose main earner is older than 65 does not change the fact that the top income quintile consistently benefited greatly from transfers. Quite the contrary, the absolute amounts that are received by the richest households, are now even higher than those that flow to the poorest households.
Following a scientific best-selling author, one should therefore exclaim: astray! We transfer to the wrong people! The welfare states on both sides of the Atlantic are suffering from a surprisingly low accuracy and alimony to a considerable extent those households who can easily afford itself completely.
From the perspective of political economics, it is not necessarily surprising, if the political agreement on the welfare state is paid for by the fact that everyone is hoping a spoonful of sugar and can also lose track of how much he in the complex web of transfer flows now just net payers or Nettoprofiteur is. However: If there are political actors whose goal it is to actually improve the situation of the poorest of them is not recommended even for tax increases to plead, but for a better use of existing resources.