In order to measure the net impact of state expenditures and taxes on the rate of surplus standard of living of wage and salary earners, we need to examine the net transfer between these wage and salary earners and the state. This net transfer is defined as benefits received by workers minus taxes paid. In this appendix we briefly outline the methods of allocating various government expenditures and taxes to labor, and then report estimates of the net transfer for the period 1952–85. Because the net transfer is negative over most of this period, it actually represents a net tax on workers. What follows is a brief summary of the methodology in Shaikh and Tonak (1987).

In determining the portion of state expenditures directed toward workers, we begin by classifying them into three major groups. The first group consists of items such as labor training and services, housing and community services, income support, social security, and welfare (except for the small items called military disability and military retirement, which we treat as a cost of war). These services are assumed to be received entirely by workers either in money or in commodity form. The second group includes such conventional categories as education, health and hospitals, recreational and cultural activities, energy, natural resources, transportation, and postal services; these are treated as social consumption in general, and the workers' share in them is estimated by multiplying the group total by the share of total labor income in personal income. The last group comprises two kinds of expenditures.