Fiscal Impoverishment in Rich Democracies

This article introduces fiscal impoverishment as a framework for comparative poverty research. We invert standard analyses of welfare state policy and household poverty by focusing not on poverty alleviation but poverty creation and exacerbation. Using harmonized household survey data, we show how the income and payroll taxes most rich countries rely on to finance the public sector serve to push households (further) into poverty. We estimate that across rich democracies on average about one in four households in poverty are made poorer on net after taxes and transfers; with fiscal impoverishment levels ranging from