They both used AGI, so there has to be something else missing. - Edit 1
Before modification by Joel at 27/02/2012 10:09:08 AM
Figure in the table was actually "Adjusted" Gross Income... that's actually entirely reasonable to use but might get you some queer results if you looked at, say, poor students, considering tuition and student loans do play a role in AGI vs GI.
Though I am glad you brought it up, because I did not think of that when comparing the NTU bottom 50% figure to per capita US income. The latter is still about 11% more than $33,000 plus a standard deduction around ten grand, which still ain't great, but a lot better than 50% more.
Also, with the 'bottom 50%' <$32,396 was that the bottom 50% of people, adults, income tax payers, households, or what? I mean, if by individual does it include the 16 year old kid who earned $5000 at their summer and weekend job? That's not a small percentage of the population. Nor are people who are mostly home-makers, students, retirees, etc living with someone else who is the principle bread-winner but do some small business or part time job. If it's household income we're talking about, things get really shaky because all else being equal a family of 5 making 50k should be better off than a family of 4 making 40k. There are, also, a lot of households consisting of one person. Jane and Jon were two households at 25, making say 20k a year and doing well, they get married, become one household at 40k, weirding the data, which further gets confused when he gets promoted to 35k and she stay at home tending their two kids and saving them money by cooking from scratch and growing vegetables in the garden and babysitting her sisters kids for free too, who then repays the favor when she gets stir crazy and takes on a part time job paying 5k just to get a few hours out of the house... how's that data looking? We didn't even add in the effect of their child deductions. Or when they get a divorce and Jon deducts his alimony form his gross for his AGI while Jane goes and lives with her sister and brother in law which might not even register as a single household. And it really gets confused if some live in the city where stuff costs more, but some other stuff is free, versus rural, especially because those demographics don't average out. You do have more single people living in the cities by percentage then outside them, Jane and Jon might have lived in the city before they got married and found a nice suburban or rural place, not even factoring in lots of others things, some of which are too politically incorrect for anyone to want to mention in a study, about various demographic differences between urban and rural. Another one in there, what about people who have brand-name obsession or suck at math or chemistry compared to otherwise identical people who don't? Ten bucks says that significantly effects relative standard of living and that generally the latter also earn more too.
Maybe I am being overly generous, but I assumed they were talking about households because that is about the only way to effectively use data from tax returns. It is far from perfect, because roommates, unmarried couples and adult children living with parents often result in one household filing multiple returns, but should be fairly representative. With unemployment around 9%, a lot of those households ARE filing a single return, without the ability to list the unemployed member(s) as dependents, even though in a practical sense they are. It passes the smell test, and without all the data to evaluate first hand that is probably the best we can expect; we must either use it as an educated guess, resort to uneducated guess or be content to label the whole thing "Here There Be Revenuers."
I remember doing a grocery run with a good friend before a BBQ we were doing where he was compares 2-liters to cans and asked me which was cheaper because he didn't have a calculator and my friends all use me as one, I tapped that little usually upper-left-corner panel where it listed price per ounce for each and he just stared at me as he realized he'd seen that a million times before and never knew the implications of it, smart guy too. You can't even try to factor crap like that into the analysis and it definitely does not average out by income level, even if one ignored that sort of knowledge is pretty heavily correlated to age too and income is very tied to age. If we're fundamentally talking about trying to raise standard of living, the actual goal, as opposed to income, the very loose metric we try to measure that through, that kind of stuff plays a huge role and you simply can't ignore it if you want actual results as opposed to good talking points.
So the data tends to be a mess and the factors don't generally 'average out', people hand-wave that in to save time or thought or the ruination of their pet theory in much the same way a young lady might say "Yeah he picked me up and bought me dinner and a movie, but I have to spend a lot on clothes and makeup" This is true, but the odds are, whichever way that balance sheet works out, it won't have been zero. It's a hand wave, which is fine in personal affairs but is a damned bad way to make national tax policy
So the data tends to be a mess and the factors don't generally 'average out', people hand-wave that in to save time or thought or the ruination of their pet theory in much the same way a young lady might say "Yeah he picked me up and bought me dinner and a movie, but I have to spend a lot on clothes and makeup" This is true, but the odds are, whichever way that balance sheet works out, it won't have been zero. It's a hand wave, which is fine in personal affairs but is a damned bad way to make national tax policy
What got me was both sides, despite almost completely opposite agendas, drew the same conclusion (the middle class pulls its own weight plus that of many others.) They both fit that into their respective narratives, and I obviously find Stewarts more credible than the NTUs, but the critical core observation is basically the same; they only emphasize different aspects of it. If the middle class is doing more than its share, the ethical, logical and practical question is how to remove some of that unfair burden.
Part of the answer is unquestionably large spending reductions, but since the generation old decision to make up deficits by borrowing from the SS trurst fund (an option officially exhausted last year,) there must be more to it. Without deficits the federal government would be running surpluses (as it was in the '90s) but the middle class would still be taking a beating (as it was in the '90s; it was just disguised by the upper middle class "benefiting" from inflated-but-worthless stock, either directly or via 401(k)s.) The only way to give them a fair shake is to shift some of their tax burden elsewhere, which brings us back to the same old issue: Do we shift it to people with the most money, or those with none? Mathematically and therefore practically I only see one answer; that I happen to think it the moral answer as well is just a happy coincidence (or unhappy, depending on whether we actually do it.)
Bottom line for me is that the sharp but steady reduction in upper class taxes that began around the time our lives did unmistakably correlates with Americas sharp but steady economic, strategic and diplomatic decline. As always, correlation does not prove causation, but it does not disprove it either.