In Entitlement America, The Head Of A Household Of Four Making Minimum Wage Has More Disposable Income Than A Family Making $60,000 A Year
The big rallying cry for the misguided #OccupyWallStreet crowd is that 1% of the population take all the money and have all the fun (or something like that). Mother Jones tries to play social class warrior with this post but the truth the matter is this. The top 1% are getting stuck with the bill:
|Bracket||Gross income||No. of Returns||% of returns||% income||Taxes Paid||% of taxes paid|
|$1 under $5,000||$27,218,608||10,447,635||7.572%||0.35%||$40,278||0.005%|
|$5,000 under $10,000||$92,407,278||12,220,335||8.856%||1.18%||$379,851||0.044%|
|$10,000 under $15,000||$155,465,805||12,444,512||9.019%||1.99%||$848,075||0.098%|
|$15,000 under $20,000||$199,017,560||11,400,228||8.262%||2.54%||$2,516,274||0.291%|
|$20,000 under $25,000||$225,167,737||10,033,887||7.272%||2.88%||$4,669,410||0.539%|
|$25,000 under $30,000||$237,994,230||8,662,392||6.278%||3.04%||$6,827,564||0.789%|
|$30,000 under $40,000||$499,879,773||14,371,647||10.416%||6.39%||$20,151,883||2.327%|
|$40,000 under $50,000||$483,088,798||10,796,412||7.824%||6.17%||$25,404,304||2.934%|
|$50,000 under $75,000||$1,149,068,817||18,694,893||13.549%||14.68%||$77,962,073||9.004%|
|$75,000 under $100,000||$990,337,913||11,463,725||8.308%||12.66%||$80,492,622||9.296%|
|$100,000 under $200,000||$1,801,446,897||13,522,048||9.800%||23.02%||$212,290,589||24.518%|
|$200,000 under $500,000||$905,347,402||3,195,039||2.316%||11.57%||$176,322,148||20.364%|
|$500,000 under $1,000,000||$332,037,478||492,567||0.357%||4.24%||$80,458,185||9.292%|
|$1,000,000 under $1,500,000||$130,149,237||108,096||0.078%||1.66%||$32,755,871||3.783%|
|$1,500,000 under $2,000,000||$76,148,200||44,273||0.032%||0.97%||$19,393,235||2.240%|
|$2,000,000 under $5,000,000||$182,986,391||61,918||0.045%||2.34%||$46,943,630||5.422%|
|$5,000,000 under $10,000,000||$97,493,167||14,322||0.010%||1.25%||$24,617,005||2.843%|
|$10,000,000 or more||$240,133,885||8,274||0.006%||3.07%||$53,790,324||6.212%|
If you take anyone who makes over $300,000 a year you come out with about 1% of the tax filing population. Here’s that table again based on that selection:
|Bracket||Gross income||No. of Returns||% of returns||% income||Taxes Paid||% of taxes paid|
By my calculations the top 1% of tax earners take home 16% of the income and pay 34% of the taxes. Where the inequality there?
As Obama ramps up to tax the rich we ask: what constitutes a fair tax for the richest among us?
From 2009 data taken directly from the IRS we get the following breakdown of high income taxpayers vs. the rest of us:
|All Taxpayers||Make over $1 Million||Percent|
In other words. Taxpayers who make over $1 Million a year constitute just .29% (point 29 percent) of all tax returns, account for 10.73% of all taxable gross income and pay over 20% (twenty percent) of all taxes.
Think about it, a group that makes up 3 tenths of 1% of our population pays 20% of the US receipts. Ummm… that’s seems fair to me.
The Left loves to decry that that “the rich get richer and poor get poorer”. Their solution is always to tax the rich. Does taxing the rich lead to better income distribution? No, in fact, quite the opposite.
Let’s put this to the test using the latest data from the Census Bureau just released to the public.
One set of data I’m particularly fond of are the aggregate income tables found here.
These data show the % of the income held by each quintile income bracket. In other words, if you sliced up taxpaying American households into 5 parts – what is the percentage of the total aggregate wealth in each bracket?
Using out trusty Many Eyes tool provided free by IBM we can give you an interactive graph of the same.
Let’s look at the data from 1967 – 2010:
Notice that distribution of income for the wealthiest jumps remarkably in 1993 after Clinton enacted what became known (even in Democrat circles) as the “largest tax increase in history.” The top 5th income bracket (those making over $100K a year) saw a huge bump in their percent take of all the money. In fact, if you narrow it to the top 5% of earners (those making $180,000 a year) their percentage jumped 13%!
Zooming in you can see this in action. Click on the last item on the left “Lowest fifth”.
The lowest fifth income earners (those making under $20,000 a year) saw their percentage command on the economy drop.
Notice that Obama has presided over the largest percentage drop in aggregate income for the poor – since they began keeping records.
So, we know what will happen if we raise taxes again. Fewer receipts and poorer poor among us.
A follow-up on our conversation from last week.
Context:Byron York and Conn Carroll got in an argument a few weeks past trying to pin blame for the current deficits. Last week I showed how they both got things right. This week I’m diving a little deeper.
Byron chalks up at least half of Obama’s deficit woes to the economic downturn. He included 1) increased Medicaid expenditures; 2) Income Security increases and 3) lower revenues coming in. I thought I’d take a look at other downturns to see if these increases are typical:
Here are a few points from this chart:
- It appears that Byron is correct when it comes to Medicaid. We can note double digit increases with each recession.
- Conn is correct in noting that entitlements (even without including Medicaid) are a significant increase and burden on spending every year.
- However, Income Security is another thing altogether. Notice I’ve pulled out the biggest increase item underneath Income Security: Unemployment Compensation.
- While Obama owns the deficits now the increased spending under Income Security rests on the unprecedented extended unemployment benefits which both GOP and Dems have supported in Congress.
- Bottom line: Obama could do little about decreased revenues and increased Medicaid spending but he has plenty of power to stop the massive increases due to Unemployment Compensation.
Some will say this is a chicken and egg scenario but I think we need to hearken back to the old axiom: whatever you subsidize you get more of. If you subsidize unemployment… you’ll get more of it. In this case – a LOT more.
Last night, Obama quoted JFK in his “jobs”speech: “Our problems are man-made, therefore they may be solved by man. ” I tweeted out: “Our problems are Obama-made.” One of my liberal friends asked how I can say that!? What proof do I have? Read on…
First, let’s look at Federal receipts (income through taxes), outlays (what they spend) and deficits (what they couldn’t pay for). All of these numbers are taken from the White House’s own OMB office:
(First, notice the spike in tax receipts after the Bush tax cuts in 2003 proving once again that Reaganomics works!)
Now, examine the steep spike in outlays (spending) since 2008. Notice that it coincides with a decrease in receipts to the federal government. From a high level perspective Obama spent more than he took in. Or, to take it even further: Obama spent a LOT more and we were taking in a LOT less. How much less? About $400 billion.
In a heated debate between Byron York and Conn Carroll, Byron asserted that over half of the deficits racked up by Obama could be attributed to the economic downturn. Byron based this on a few items 1) An increase in “Income Security” outlays 2) Increased federal Medicaid spending and 3) Fewer dollars coming in. All of these items could indeed be attributed to the downturn.
But I think Byron misses the real culprit – a “sub-function” of Income Security: Unemployment Compensation
Let’s look at outlays by major spending category (the OMB calls them “functions”):
Social Security is the highest outlay every year since the early nineties (note: we need to fix that). Defense is the next biggest expense (notice the spike in spending since 2001 – duh – I’ll keep this line item growing thank you).
Other notable outlay jumps include: 550 Health, 370 Commerce and Housing Credit (think TARP, Freddie, Fannie), and 600 Income Security.
Income Security includes all federal assistance that isn’t social security. The OMB categorizes this into a handy numbering system:
- 601 General retirement and disability insurance (excluding social security)
- 602 Federal employee retirement and disability
- 603 Unemployment compensation
- 604 Housing assistance
- 605 Food and nutrition assistance
- 609 Other income security
To recap, huge uptick in “Income Security”, decent uptick in “Health”, a one-time uptick in commerce help, and sundry upticks in Education and other items.
Got it? Good. OK… let’s zoom in Income Security:
Let’s pause for a moment so I can rant out loud: what kind of crazy government do we have that requires 4 charts to understand where all our money is going!? Anyway, I digress.
There are two big outlay jumps here since 2008: 603 Unemployment Compensation and 609 Other Income Security.
The jump in 603 outlays has to do with the unprecedented unemployment benefits extensions offered by the Obama administration. Since 2008, outlays went from $45.3 Billion to $160.1 Billion! That is one massive jump and account for over 5% of the total deficit between 2008 and 2010.
609 includes numerous items (taken from ourdime.us):
- TANF is the Temporary Assistance for Needy Family program. Before 1996 this was known as “AFDC”. It’s probably the program that most people think of when they think of “Welfare”. It gives money directly to people to spend.
- SSI Disability is the collection of all SSI accounts. It is disability insurance paid to people who cannot work and have no other income
- Foster Care covers both Foster Care and Adoption services
- Child Care Enforcement is only the cost of enforcing Child Support minus the Federal Share of Child Support Collections
- The biggest expense is Tax Rebates. There are a number of tax credits mostly targeting the poor.
- Other Non-Direct Welfare are programs that help the poor, but unlike TANF they do not give money directly to its recipients.
The confusing part here is Medicaid. Byron puts Medicaid spending as a huge part of Obama’s deficits. But Medicaid is a state “program” which is given Federal matching funds. The breakdown above is by “function.” Confused? So am I.
Since it’s a program managed at the state level the Federal matching funds are spanned across several of these items. But looking deeper into a PDF from OMB I can confirm Byron’s numbers that Medicaid went from $190 Billion in 2007 to $272 Billion in 2010 but that increase about half of $160 Billion we noted above via the Unemployment Compensation.
By slicing the budget apple by category (rather than by program) we can see that the deficit pie slices into interesting bits.
From 2009 – 2010 (the years Obama was actually in office) he ran up $2.7 trillion in deficits. About $400 Billion of that was from decreased revenues (fewer taxpayers, fewer tax dollars). Now look at the breakdown of categories showing increases in spending in 2010 compared to 2008:
Boil it all down and what do you get:
- Byron is correct in asserting that a good portion of the Obama deficits came from the impact of an economic downturn.
- Conn Carroll is right that entitlement spending is impacting the deficit today (25% of the increased spending came from Medicare and Social Security).
- I’m right (patting myself on the back) that Income Security, and in particular, Unemployment Compensation is the single biggest culprit in spending increases.
Bottom line: Obama inherited a terrible recession (along with the deficits that come along with a recession) and made things worse by increasing spending in a massive way.
Here are the categories with increases (in billions of dollars) and the % increase from 2008:
How much do you think the United States has spent over the past 40 years on federally subsidized school meals and milk? Take a guess…
Try $225 Billion. $13 Billion just last year. Note… you get more of what you subsidize… not less… ever!
More importantly, what if 70% of workers in your industry were retired and you were still paying for them?
According to recently released data by the Railroad Retirement Board 68% of all railroad employees are annuitants – i.e. collecting benefits. Of the identified 777,646 railroad employees across the United States 528,759 are now retired and collecting paychecks.
I don’t begrudge anyone their retirement checks but I’m looking for others to quell my implied criticism or make a bigger deal of it. Is this standard for any industry? Is it because railroads are an old industry? Is this the baby boomers effect? Is this part of the reason why railroads want an injection of cash from high speed rail?
Help me out. As always… awesome charts (wide-frame for y’all – data from Data.gov and IBM’s Many Eyes):
“People ask my why I live in California where the marriages last 2 months, the trials last 2 years, earthquakes, mudslides, road rage and fires. Then one day you’re playing baseball in the park, it’s 80 degrees out and you think. My gosh! It’s January!” – From the sitcom, Its Like, You Know
I grew up in California and even though I’ve spent more years now in the state of Virginia I still consider myself a Californian. Which is why it pains me to see my state go to pot. (Wait, that’s not the right term…).
California has a fiscal problem. One of the indicators that things are not always sunny in California are the MASSIVE welfare rolls in the state. According to 2010 TANF data provided by HHS California accounts for 32.62% of all the welfare rolls in the country. One third! (Hat tip to Chuck DeVore who posted something like this last year.)
Using one of my favorite tools by IBM called Many Eyes (http://www-958.ibm.com/) I put together some visualizations to show you just how bad it is. (You can play with your own visualizations and the data here).
First let’s compare California in a bubble chart to other states and