There is a widespread perception that the US fiscal system―composed of taxes and transfers―has become less progressive and less redistributive over the past 50 years and that pretax inequality has increased. Many believe that the system has not only failed to address rising inequality but has exacerbated it through lower top tax rates and evasion by the rich and by corporations.
Our study reviews and reassesses this research. To do so, we examined the results of all existing research on the topic in the past decade, looking broadly across different methods and measures of redistribution. We examined the underlying data where available and the overall results of studies that did not make their data available. Our findings reveal that contrary to widespread belief, the consensus of existing research is that the tax and transfer system redistributes substantially more now than it did in the past 40?60 years―regardless of the research method or measure of redistribution used. While there are robust debates about the effect of the tax and transfer system on the top 1 percent of the income distribution, there is broad agreement that there have been large increases in the net transfer rate to the bottom, and the size of these increases swamps changes at the top.