“We take money from poor people in rich countries and give it to rich people in poor countries . . .” Huh??

by Andrew Gelman on June 24, 2011 · 10 comments

in Foreign Policy,Political Economy

Yesterday I pointed to a quote from Israeli leader Shimon Peres, who expressed skepticism about foreign aid (although perhaps, according to commenters, his problem is only with non-military aid).

I noticed another odd thing about Peres’s remarks. Peres said, “Giving is problematic. We take money from poor people in rich countries and give it to rich people in poor countries.”

I don’t know enough about foreign aid to comment on this last part—Israel is a middle-income country so it doesn’t really fit in either category—but let me express objection to the first part of the claim, that “we take money from poor people in rich countries.”

U.S. foreign aid is coming out of the Federal budget, right? And Federal taxes are mostly paid for by upper-income Americans, not poor Americans. Here are some numbers from Tony Fratto, by way of David Leonhart: the people in the top 5% of income pay more than 60% of the Federal income tax, while the bottom 50% pay less than 3%.

This is not an argument about fairness—as Leonhardt points out, high-income people have a lot more income and so of course they pay most of the taxes!—but it does seem to decisively shoot down the claim that the Federal budget (and, by extension, parts of it such as foreign aid) are being paid for by “poor people.”

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