The latest numbers from the OECD—which compare inequality, incomes, and poverty rates across its member countries, before and after the impact of taxes and transfers—present yet another reminder of the United States’ dismal ranking among its peers. They also make a remarkable case for the power of social policy to combat inequality. At the pre-transfer or market rate of poverty, the U.S. poverty rate is pretty close to those in other settings [see graphic below]. But after taxes and transfers—that is, after social policies and the mechanisms for paying for them have kicked in—the U.S. poverty rate leaps ahead of its peers.
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