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America's Income - Who Has It?
America’s tax system and the major social programs (Medicaid and Obamacare) are driven by income. The Social Security Administration has put out a report on income in America. The data covers all wage earners (153.6 million workers and the $6.5 Trillion they earned). The Following is a pic of the report (link), if you’re working, you’re somewhere on this page:
Let’s start at the top of the pile, those that are making the really big bucks. For example, consider the number of people who made $50m in 2012 (the 0.0001%). There are 166 people in this group. Who are these folks? Basketballer Lebron James made the list, so did actors/performers Robert Downey Junior, Beyonce, Cameron Diaz and Christian Bale. From the corporate side we have Disney’s Robert Iger and Apple’s Tim Cooke.
Who are the wealthy in America? Anyone making over a million bucks a year is certainly on the list. The plus $1M set totaled 119,400 people (0.08%). These lucky few earned a total of $170b (3% of all income). How much should these folks be paying in taxes? Let’s go hog wild and nail them with a tax of 90%. The incremental revenue (they already are taxed at 39.6%) would be $85b, but sadly, that only covers five weeks of Social Security benefits.
The IRS defines ‘rich’ as an individual with annual income of $200k ($250k per couple). This income level marks the 1%:
1.6m workers (1% of total) earned $900b (14% of all income). This is the measure of US income inequality. The 1% earn 14% of the pie. If the federal tax rate were increased to 75% (double current), it would increase revenue for Uncle Sam by about $150B. That does not fill a $1 trillion bucket, and it would be an economic disaster to set tax levels at French rates. Bottom line – the notion that taxing the rich is a solution is all wet.
Now consider the bottom. In the case of Medicaid, the cut off for availability is equal to 138% of the Federal Poverty Level (FPL). For a single person the number is $16,600, for a couple it’s $22,000, for a family of four it’s $33,000. The average income for all individuals/families that might qualify for Medicaid is about $25,000. If you look that up on the SS chart you see that a whopping 46% of all income earners can qualify for Medicaid.
And then there is the Affordable Care Act (AKA Obamacare). To be eligible for Federal subsidies, one must have an income of less than 400% of FPL. Depending on family size, subsides are available up to $90,000 of income, but the average income where the subsidies are significant is closer to $50K. Again, look up that income level on the SS chart. 73% of all workers make less than $50k! 7out of 10 workers are eligible for subsidies? That blows my mind. No wonder the Democrats love ACA so much - freebies have always translated into votes
So who is left in the middle? There were 41m workers (23% of total) who made more than $50k and less than $250k. This group earned $3.5T (52% of total income). So the middle is where the money is; a quarter of all workers earn half of all income.
If Washington needs more revenue, it must come from the folks in the middle. But the reality is that the middle is already taxed from every direction (they also pay state income taxes, Social Security and other payroll taxes, property and sales taxes. So once again, raising taxes as a way of balancing the nation’s ledger seems to be a very difficult task.
What to make of all these numbers? Something is clearly wrong when 47% of workers earn a poverty level income. Similarly, there is something wrong when 1% of workers earn 14% of all income. The obvious solution is to tax those on the top and transfer it down to the bottom. But that is what we are already doing; more of the same is not going to change the outcome.
My conclusion is that America is not the ‘rich’ country that people think it is. And there ain’t a hell of lot that can be done about that.
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"The problem with the Internet is you never know who really said what." - Abraham Lincoln - Democrat
I have these old things called books lol. You may have heard of them from your parents.
Perhaps you ought to read them?
Source your Mark Twain "quote". Have fun...
Prove that Hemingway plagarized it.
I heard of such a thing; one in particular, called The Sun Also Rises, by a chap named Hemingway:
Gorton inquires of Campbell, "how did you go bankrupt?" to which Campbell replies "Two ways... gradually, then suddenly."
Pretty soon the only thing they'll be good for is wiping your arse, the books that is.
This is a shell-game post where the author doesn't answer their own question. The money is in corporations and trusts. Trillions in off-balance sheet holding "shells" worldwide is a start. To put it bluntly, Widowmaker knows the numbers cited are not remotely accurate, where one can minimize their earnings to a loss and stay "middle class" when they are anything but. This information is a misinformation with what the wealthy are REALLY doing.
The same horseshit exists with paying for roads. Trucks (18-wheelers) perform a vastly disproportionate amount of damage to America's highways, yet pay an absolute pittance of the cost to repair.
Again, business gets a handout and citizens get the bill.
So a wealth tax?
I can make my income appear and disappear when i want to. I can do the same with my wealth.
Unless you plan to have jackbooted thugs surveilling my house, examining my possessions by surprise visits, and a posse of vigilantes trying to track down my wealth you aint gonna find it. Or perhaps you are gonna confiscate trusts and other property hugo chavez style?
Those sound like great ideas to you though, don't they?
Way to prove Widowmaker's point. Since when have you not disclosed the color of your shit to the IRS??
Shell games for the rich, income tax for the middle class -- jack booted thugs coming soon on behalf of the IRS, national security.
You can almost guess who's a societal loser OR a college guy with no income, usually just by listening a bit to their ideas of "how world should work"...
As a bonus, for this wasted time, you can also figure out their IQ pretty quickly.
Hank Paulson earned what this year? I don't know the anwer to that. I would guess it was a lot less than the 500 million he walked off from Goldman Sachs with, when he went to become a member of the Bush administration.
Income and wealth are two different things.
Paulson authored a book, "the revisionists guide to covering my own ass and staying out of prison courtesy of politics bought and paid for"
Next up, Jon Corzine.
Half of Walmart employees are over the the 40th percentile. Well maybe not quite half but pretty close... I'll bet if you add in the top tier their average income does quite well. Walmart as a company does a good job of representing the country I used to know.
THE FINAL SOLUTION: a "wealth" tax (ie tax on net worth), like in Norway.
1% tax on assets over $1m
3% on assets over $5m (High net worth)
5% on assets over $25m (ultra high net worth)
continue with wealth tax until the wealth of top 1% and top 0.01% drops to the 1945-1975 average, befiore "financialization" of the economy took hold.
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Problem Solvered!
OK, I'll pay your wealth tax if you refund everything I've ever paid in income taxes, plus interest.
should that include 401K's and IRA'S because if you do you must include (union,& private ) pensions what would it take to generate 50K a yeary ? 1.5M 2M ?
Try $5 Million at todays interest rates. Unbelievable deal these public parasites get. Work 20 years and have a pension worth $5 million. Taxpayers were supposed to put away $250K per year for those pensions on top of the vacation, health, etc. bennies. How many taxpayers making $50K - $90K a year in the real world would have supported paying their police, firemen, teachers, and other assorted parasites those kinds of wages?
I agree we are not as rich as the political-economic ruling class thinks.
How big a military-security apparatus can we afford?
Left and right, all together now:
USA OUT OF EURASIA
(plus rollback of most Federal efforts to about 1980 levels)
(plus AFTER THAT enough tax revenue to balance the budget with a surplus)
(oh but the corruption makes all that impossible--never mind)
"...to about 1780 levels"
FIFY
My job, when I was in the United States, was to make sure health-care providers got paid for their services. It is true that a huge number of people (47% is actually rather low in reality, because if someone suffers catastrophic illness, their income drops and Medicaid eligibility also takes into account outstanding medical bills as a percentage of income) can qualify for Medicaid. I used to tell everyone that America already has insurance for everyone... it is called Medicaid, and nearly everyone who needs it can qualify for it.
What level would the AMT be at if it had been indexed for inflation when it was originally implemented?
The bottom half of the 1%, while is not bad, I would not call rich, well off sure, rich, no. By the time one "taxes" themselves for retirement savings and $ for the kids college education, pay for adequate insurance, Life, health, Auto & home, there is not that much left over. Most of us are on the same treadmill, the surroundings might be nicer for some but the treadmill is the same.
There is a huge difference in the ability to get ahead for those making 1 million+ a year and family's at 300K, yet both are 1%'ers
Exactly, the wealth gap has gotten so large that you can't classify it any longer... you can't classify the various social strata in the traditional ways...
"So who is left in the middle? There were 41m workers (23% of total) who made more than $50k and less than $250k. This group earned $3.5T (52% of total income). So the middle is where the money is; a quarter of all workers earn half of all income."
if you use the Pareto distribution - applicable only in wealth, not income (and this is mostly labour income anyway, isn't it? then financial income is taxed differently) it's 80% vs 20%
so when it comes to wealth, the lower classes have generally 80% of the heads (and mouths to feed) and 20% of the wealth
of course the "rich" 20% can again be divided into a group of 16% and one of 4%
just saying that income is very deceptive. particularly labour income, which is anyway declining. while financial income is getting a bigger share (and don't forget the impact of housing asset appreciation). it's only the income tax that makes it so... political
and 41m workers might or might not be feeding 2 to 3 other mouths each, making the house-hold count different, and reaching approx. half of America
nope. methinks that as usual the real problem is not "eat the rich" or not. it's about how those social programs are shaped
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btw, I somehow remember that the US had once a maximum marginal tax of 92%. under Ike, if memory does not fail me
Hardly any one paid it. No one reported that level of income. Income distribution hasnt changed much. Reported income can change drastically based on incentives.
The Western Crony Kapitalist system is so out of whack, the Tower of Pisa is an Arrow by comparison, and as you say "there is no way to fix this"
we are overdue for a Revolution 1 way or the other
What to make of all these numbers? Something is clearly wrong when 47% of workers earn a poverty level income. Similarly, there is something wrong when 1% of workers earn 14% of all income. The obvious solution is to tax those on the top and transfer it down to the bottom.
Well, thanks to the welfare state they sure don't live a poverty level existence. Not yet anyway. This is the deal they voted for over and over again....so what's the problem?
The social contract between the welfare state and its dependents is about freedom from want including a certain amount of entitlements and “rights” to things like housing, healthcare, education and retirement. Now you want income equality too? Why? To achieve freedom from envy? Not only does this amount to trying to alter the original terms of the deal but it’s also a rather high class problem to have in the context of class struggle in human history.
Hundreds of modern conveniences and comforts that would make their grandparents blush, a free jobs-Americans-won't-do pass plus the caloric intake of a Roman emperor and that’s not good enough because Cameron Diaz can still buy a whole bunch of other crap that the government-will-provide crowd can’t afford. Not to pick on Ms. Diaz (who has been in the immediate area recently and is certainly keeping up appearances) but it isn't actually all that hard to structure your life in ways that A) have nothing to do with money and B) would make someone like her envious.
My advice to those in "the 47%" who want to raise their material station in life: GET A GOVERNMENT JOB. The biggest difference between today and whatever earlier era you think was more “fair” is the size and scope of government and that's what's left after you take Occam's Razor to this problem. So, you might as well dance with the one who brought ya.The above charts don't mention that after you put in your 20 years that (government job) income keeps flowing for life (and beyond). Then you'll find yourself on the other side of envy.
I have no problem with people making a shedload of money in voluntary and competitive markets. Profits, then, are a direct measure of how their purchasers value their value-add... ie, profits are a measure of what they've given to society.
What I and most others have issues with are people who make a shedload of money in 'protected' industries, or those working directly downstream from them - finance is the most obvious example. End banks' ability to create legal tender out of thin air, end bailouts, and most of these issues with income disparity will disappear.
And tax people on resource monopolisation, not income. We need people/entities to have monopolised access to natural resources to exploit them efficiently... tax them for this privilege.
Government is the one who does the protecting in your above example, so again, thar lies the beef.
I don't know that efficient resource exploitation requires a monopoly. The gas/oil fracking revolution involved a lot of smaller companies who were probably discouraged more than encouraged by government every step of the way.
47% qualify for Medicaid, etc.? Already taxed to the hilt - yes.
COULD just be that living standards can no longer be justified by the U.S.'s dismal productivity as an economy...
Living standards just have to fall, and they will...not evenly, not "fairly" but perniciously - whatever the governments attempt to do.
To paraphrase "1st they will fall gently(as they have been for decades) than all of a sudden(nearly there)"
It's a spending problem, not a "revenue" problem.
Bruce baby - we're rich because we love to spend other peoples money/credit! How could that possibly end bad? Mr Yellen - get to work!
The dead hand of the regulatory and bureaucratic state is squeezing opportunity out of society. As it becomes more and more difficult to find a job, start a business, maintain a standard of living, or accumulate capital we all get poorer and poorer. Nothing will reverse this trend but catastrophic failure. There is very little wisdom in "conventional wisdom" and a great deal of hubris.
It really is very difficult to start a small business in the United States. It is much easier, much easier, in many other countries. This is really all you need to know about where the future of economic growth is.
Of course, the macro business environment ends up following the business life cycle...
Which ones?
A few hundred dollars and you can incorporate in most any state in the Union.
Don't have to pay bribes for liscences and things happen in day not months/years.
You are right, Arthur, so maybe he meant it is very hard to run a small business instead of start one. Starting is both easy and cheap, and he obviously does not know much about the difficulties in foreign countries.
Staying in business is another matter. It is hard work, but if you do make it, that's when things start geting good. That new BMW, well it's a company car, and so are all the expenses that go with it...so, pre-tax income. Grab an HSA, and sock away 3-11K a year for a couple, year after year, tax deductible, of course. Give yourself a couple of grand a month in "expenses" along the way, take 'business friendly' vacations and write them off, and on & on. If you have the cash flow in your own company, you can live a very large, tax-free life on the company dime.....and it's all legal if you do it right.
Oh, and did I mention that your goal is to have as small an "income" as possible? Pay your wife, your kids, and shelter every dime you can in company retirement plans, then max out your IRA's from your declared "income".
Just how many S-Corps & LLC's are there in America? I started my first one in 1982. Best deal out there, if you don't mind the work.... and the risk. The water's fine. Just jump in & start swimming.
Exactly, what, you thought CEOs are concerned about the companies that hired them???? LOL.
For those inclined to eat remember........bath salts make people taste better.
Indeed, it says "NET" compensation ! this is useless info
Read the source website. NET just means there is an add back for deferred comp. It's a relatively tiny number, but these numbers are actually greater than gross wages.
The more important problem with this is that this is all W-2 wages reported by employers. That excludes a lot of income sources.
Exactly... selling prescription meds, prostitution, you name it...
Further, the issue isn't income, in and of itself, rather it's the purchasing power of that income... so, what happens to folks in poverty? Well... they band together! Countless folks have the following relationship: I qualify for HUD/rent assistance, and you get foodstamps, so let's co-habitate and sell any food stamps left over. Endless amounts of these folks. Poverty carries a bad mental image, but poverty can't be determined from income alone. Again, not to flog a dead horse, but we return to the get on the dole and get the equivalent of $75k/year in benefits issue.
Obviously the wealth gap is punitive and carries with it incredible moral hazard and disincentive to produce, but we need to address some of the terminology. I also strongly suspect that poverty in the future really will mean poverty, but we're not there yet. Of course, the neat thing about the wealth gap is that it's generally self correcting. Unforunately, the time frame for this correction may be incredibly long and, likewise, may impact the less fortunate moreso than the fortunate.
The only thing you can do to correct the wealth gap is to force competition... to create checks and balances in the system to ensure the self correcting process doesn't take the entire system with it. There isn't a need to tax away the wealth, rather all you need to do is force competition and allow failure when it comes...
Exactly, the key word in the chart isn't "net" it is "compensation".
I'm assuming unearned income is not included. Bruce, do you have a chart of "total income"?
Re: I'm assuming unearned income is not included. Bruce, do you have a chart of "total income"?
Unearned income is like wealth. We can't "touch" that one.
Unearned income is investment income. This can be in the form of short/long-term capital gains, dividend income and interest income.
All of these categories of unearned income are taxed. Interest income and short term cap gains are taxes at 'ordinary rates', while LT gains and certain dividend income is taxed at a lower rate (25%).
No one avoids the tax man.
Is that supposed to be a joke?
Let's eat the rich anyway. They might not taste so good, but as zombies at least we'll have feasted for a day.
I'm all for taxing the rich at 90% of all income no matter where it comes from especially if it hits all the mega-millionairs in the Senate like the Wicked Witch of the West Pelosi, Frankenfinestein, Scarecrow Soros and Cowardly Lion Buffet.
But like Obummercare, they'll exempt themselves from the laws only meant for the Oblongs.
Stupid. Why give anything to the feds. And what is rich? Some guy working 80 hours a week and pulling down $200K trying to save for retirement or the public sector parasite who jerked off for 20 years and now has a pension the NPV of which is about $5 million?
Income is not wealth and in no circumstances is the general welfare improved by taking from anyone and giving it to the feds.
I just want to hear them squawk about how unfair life is that they have to pay so much tax on all their income no matter where it comes from.
Don't give a shiite about where the money goes, just watching the millionaire senators start bitchin' and trying to pass laws exempting themselves and their families would be entertaining in itself.
Of course the Senate being what it is we know for a fact no such legislation will ever be brought to the Senate floor for a vote.
And, what do I care if the ill gotten gains Reid, Pelosi, Feinstein, Boxer, Soros, Buffet, Gates and all the rest including the Wall Street vampires are fed to the FSA.
The middle class has had its wealth and assests stripped to feed the voracious appetite on Wall Street and in the District of Criminals. It would be nice to see these fat cats brought down off their ivory towers every once in awhile.
Its either that or time to storm the Bastille and sharpen the guillotine blades. We might even see an old industry revived for the duration. Weaved baskets big enough to catch the heads of the aristocracy as they get sliced from their bodies. Off with their heads and then shove cake up their bung holes.
Viva La Revolution!
Middle class votes for government.
Government steals money from middle class.
Middle class too stupid to resist siren song of lying government and deserves to be screwed.
Eat the workers, then eat the rich.
Then eat each other.
Where have I seen this before?