Transfer payments are a form of income to individuals for which no current good or service is expected in return. They differ from other payments to individuals for which either a service (including labor services) is performed in return for such payments or a good is exchanged.

Transfer payments can originate from either business or government sources. Business transfer payments include corporate gifts to nonprofit institutions, payments for personal injury, and taxes paid by domestic corporations to foreign governments. Far more important, both in dollar terms and policy significance, are transfer payments originating from government sources. Government transfer payments can be made by any level of government (federal, state, or local) and can take the form of either cash or in-kind benefits. Cash benefits include Social Security; government employee, military, and railroad retirement pensions; unemployment insurance; veterans' benefits; workers' compensation; cash public assistance (including Temporary Assistance...