There’s talk of the income gap out there (and that it is a crisis), but let’s take a quick look at this again.
A 2019 study by Ryan Bourne and Chris Edwards found that most of these claims don’t withstand scrutiny.
The US Census Bureau publishes household income and inequality statistics by dividing households into quintiles – or fifths. Its numbers show the top quintile having more than 16 times the income of the bottom quintile.
But that is on a gross income basis. They exclude the fact that the top quintile pays most of the taxes. (I pay over 40% of my income to the state and federal government in taxes.)
The bottom quintile doesn’t pay any taxes but instead RECEIVES payments and non-cash benefits. Some years ago the income of a family who does not work at all in my state was the same as the average household income.
When you consider the NET, after taxes are paid by the top and income and benefits received at the bottom, the top quintile’s income was only 4x the bottom quintile.
Inequality has actually fallen slightly in the post-war period.
The big problem is that because of benefits received by the bottom quintile from all the various programs to boost them, they have a slightly higher income that the second and third quantiles above them. That is to say that there is no benefit to working for 40% of the people compared to not working at all and collecting benefits.
This kills incentives to go to work. And when you don’t work, you don’t learn new skills and get experience and are not likely to get more than an entry-level job if you decide to go into the workforce.
Convention wisdom says that the poverty rate is in the low teens, but when you consider non-cash benefits received by the bottom quintile, the poverty rate drops to 3 percent or less.
Just thought I’d publish the facts today.
What do you think? Is income inequality a crisis that has not been addressed already?
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I think you NAILED IT (again), Larry… It’s been said that there are lies, damn lies, and statistics – I think you demonstrated here that statistics can be, and sadly often are, used to propagate damn lies that become ‘facts’ (and then unsupported beliefs) by being repeated often enough and pervasively enough to create a new reality for the uninformed based on the misinformation, or disinformation, provided by ‘authorities’ or ‘leaders’… (That’s why all ‘regimes’ have propaganda machines as part of their core architecture.)
I only wish this were the ONLY place we were seeing this today in support of agendas that stain and break down the fabric of our Nation and culture, and that serve as tools of divisiveness rather than fostering the inclusion that is claimed to be the goal.
Keep ’em comin, sir! And keep challenging your subscribers to think differently (and daily) and understand truth rather than rumors. HOW you think is more important than WHAT you think because how you think often determines what you UNDERSTAND from what you think – and understanding is the goal and the basis on which wise and successful decisions are made.
I could go on about levels of cognizance from information to knowledge to understanding to wisdom, but that’s for another post…
Thanks again!! Great one to get the brain working this morning! 🙂
I agree with thos post. I actually angers me to watch my hard earned dollars go to very capable people who could work and contribute to society but won’t because there W2 keeps coming. I believe everyone needs help some times but after a few months benefits need to be cut off forcing people off government assistance and making them have to find there way.
Let’s all appreciate that we CAN work, earn our way & contribute. Those who don’t experience the luxury and benefits of work are truly poor. We can’t fix that through legislation.
Great post Larry!
Great message…thank you.
I could rant about this all day, but I won’t because I have a job to do, somewhere out there someone is expecting me to pay their way again this month.
I will just say, great post Larry, I couldn’t agree more.
Well said.
Thank you so much for pointing out these facts! I wish we still had leaders like President Reagan who would state these types of facts to a national audience. People need to be informed of the truth. Many people are purposefully kept in the dark by those with the power to give them their benefits so that those uninformed people will continue to vote for and support those people in power. It’s a vicious cycle that’s been going on for decades and is only getting worse. I’ve long said that once the scales tip to where the productive people can no longer support the non-productive then we will have an absolute disaster. Maybe it’s time for “Atlas to Shrug”? (Those who don’t know what this means needs to watch the movie “Atlas Shrugged”.)