Bryan Caplan, quoting from Greg Mankiw, puts out some very interesting numbers on government transfers to households in the United States.
As Caplan puts it, this table shows a pattern “neither liberals nor conservatives will expect”. Some points to be noted:
1. government transfers per household to the top quintile is much more than to the bottom quintile. While the former pay taxes and the latter don’t, this is simply bizarre and shows how ill-targeted transfers in the US are
2. The bottom 60% of households in the United States pays negative tax! The “middle quintile” pays taxes but gets transfers from the government of twice the amount.
3. The net taxes paid by the 4th quintile is negligible ($700 per household). So effectively in the US, only the top 20% pays tax.
I wonder if it is possible to get such data for India, and if we can, what it will look like. If we manage to tack on all subsidies to the “transfers” thing (food, fuel, etc.) it should present a very interesting picture. My guess is that the “effective tax base” in India will be much lower than that of the US.
Any data sources that can help us construct one such table for India?