Chart of the Day: How Taxes and Transfers Affect US Incomes

A new analysis of the distribution of household income by the Congressional Budget Office shows how taxes and means-tested transfers such as Medicaid and food stamps affect US incomes. “The combined effect of means-tested transfers and federal taxes in 2015 was, on average, to increase income at the bottom of the income distribution and decrease income at the top of the distribution,” the report says. The chart below gives a sense of the scale of the taxes and transfers relative to income, and the degree to which they make a difference.