Government redistributes income through tax and spending programs. Nearly everyone pays some tax – be it federal or state income taxes, payroll taxes, or sales taxes. The tax system also affects people by delivering a host of benefits through tax expenditures (subsidies like the mortgage interest deduction or the child tax credit).   And broad spending programs such as national defense and Social Security affect nearly everyone over the course of their lifetime. Yet, we know surprisingly little about the combined effect of taxes and spending on our well-being. Two new studies—one by the Congressional Budget Office (CBO) and another by the Tax Foundation—have begun to close this knowledge gap by analyzing spending and taxes together. Tuesday, I participated in a TPC panel discussion that highlighted these papers (you can hear the program and see the slides and papers here). Two things are clear: First, what CBO and the Tax Foundation are trying to do is very hard. It requires analysts to make assumptions about how taxes and spending affect people. Second, there’s a lot of redistribution—for example, from the nonelderly to the elderly and from higher-income people to lower-income people. (I focus on the CBO report here but the Tax Foundation’s analysis reaches similar conclusions.) In 2006 (the year the CBO report focuses on), the federal government spent roughly $2.7 trillion and collected $2.4 trillion in taxes and other revenues. The CBO study focuses on three groups – the elderly, the nonelderly with children, and the nonelderly without children. Given the size of Social Security and Medicare, it’s no surprise that CBO found that in 2006 the elderly received more in benefits than they paid in taxes.  But, as my Urban Institute colleague Melissa Favreault pointed out, it isn’t that simple. What if you look at this picture not as a one-year snapshot but over a lifetime? Today’s elderly paid taxes when they were younger—in many cases, more than they will receive in benefits.  And the story gets even more complicated because some nonelderly people benefit indirectly from Social Security and Medicare. Retirees’ children benefit because they do not have to provide as much support for their elderly parents as they would without the programs. Younger households present other issues.  CBO found that government spent more on low-income households in 2006 than on high-income households. But people’s incomes change during their lives as they move from low-income to higher-income or vice versa. An annual estimate may not reflect how a person will fare over a lifetime. Other kinds of government spending create different challenges, especially programs such as defense. Unlike transfers that go to individuals, defense is a public good—we all benefit in some way. But how should we value those benefits for individuals?  Do we all benefit equally? Do rich people benefit more? There’s no clear answer. Ultimately, this sort of analysis could also provide information on how pre- tax-and-transfer income differs from after-tax-and-transfer income – information likely to be in high demand in any serious budget negotiations. We know from the CBO report the net effect of taxes and transfers on broad swaths of the population, but not on individual families or households within income classes. This can mask big winners and losers within income groups. Notwithstanding these reservations, the CBO and Tax Foundation reports help us start to think about taxes and transfers together – and give a more accurate view of government than we get by focusing on only one side of the budget.