Monday, February 4, 2013

$14/hr full time More like $10.95/hr FT

There are lots of alarming statistics regarding the National Debt.  Here's one that doesn't get a lot of play: how many possible tax payers are there to pay for Government expenses?  Keep in mind that the number we're using for total Federal expenditures is $3.6 trillion, which is probably about $600 billion short of what the Government is on-track to spend in 2013.

One way to look at it is this way: the Census bureau says there are 113,146,000 households in the United States.  If every household is a potentially-taxable economic unit, then there is one tax-paying unit for every 2.65 people.  And with 113,146,000 tax paying units in the US, that means the average tax paying unit has to pay $31,818.00 in taxes to balance the books.  That doesn't seem catastrophic until you realize that the Median Household Income in 2012 was $ 45,018.00 -- meaning that the Median income minus the Average tax burden equals $13,200, or about $253 a week to live on.  Good luck with that.

Everyone who makes less than $ 45,018.00 is right now asking themselves who these other people are making more than that, but it gets worse that that.

While there may, in fact, be 113.2 million households in the US, the Bureau of Labor Statistics has something far worse to say about this situation.


Holy Moley! I was looking straight at the data, and looking at all the labels, and I made a pretty serious mistake.  If you go here to the BLS data source, you will note -- as the crafty reader Trogdor did -- that the data is not expressed in millions of workers: it is expressed as a percent of the civilian labor force. So when we compare Jan 2009 to Jan 2013, and we see 65.7 - 63.6, the 2.1 there is a difference of 2.1%, not 2.1 million.

However, that said, the estimated civilian population over the age of 16 in the US today is roughly 249,140,000 (thx,  That means the 63.6% is 158,204,012 -- which is actually better than the households number, not worse.

That fact mostly overturns all the real down-side of the crossed-out part, below.  And it always stings to have to post a retraction like this. Yikes. HOWEVER, if we do the math at 158.2 million taxpayers, that's still $22,755 per tax payer annually to break even on the current Federal expenditures.

The correction is noted, and paid for, and booked.

  They say that, as of January 2013, there are only 63.6 million people in the workforce.  See: they track that statistics month over month, and there's the table:

Values are expressed as millions
63.6 million people working for a paycheck in the United States.  That means there's only one potential tax payer for every 4.7 people in the US -- so about 20% of the population if we assume every single person with a job is a potentially-legitimate tax payer.

If there are only 63.6 million people working in the US, that means the average taxpayer has to pay -- get this now -- $ 56,604.00 to cover the expenses of the Federal Government.  As if the average person is making $ 56,604.00 per year.

"Yes, but," comes the rejoinder from the person who thinks the US Government doesn't have a spending problem but an income problem, "You haven't accounted for Corporate taxes here.  Corporations have to pay their fair share of taxes.  That should help out a LOT, because God knows that's where the real money is."

Well, see here: The highest level of all Corporate Profits after taxes in the last 5 years is only $1.7 trillion.  If we just told them to eat it and taxed all corporate profits at 100%, that would still leave a tax bill at the Federal level only of $1.9 trillion and force the average taxpayer to pay $29,875.00 in taxes. That's $14/hour at full-time.


Nash Equilibrium said...

Frank, a couple of comments.
On one hand, you can't compare median income against the average government expenditure; you'd have to compare average per-capita income to the average amount of government spending per capita to have numbers that are comparable. I imagine that there is a huge difference between average income and median income, given the uneven distribution of income in the USA. So mixing those two things overstates the case a bit.

On the other hand, a good portion of Corporate income is already included in personal income (in the form of dividends and income pass-through from S corporations, LLCs, and the like). So in that sense you've understated the case by double-counting some portion of Corporate income and personal income.

Technicalities aside, I agree with you, there is still a huge, huge mismatch between government spending and national income. Democracy has essentially been reduced to "mob rule" without limits, when it comes to fiscal issues, with each person voting themselves benefits from the government trough. What a mess!

Frank Turk said...

Hi Nash --

I realize that "median" is the one in the middle, and "mean" or "average" is in fact the sum divided by the number of data points. However: the point of the comparison is simple -- you yourself know how much money you make, and whether or not you personally can afford to pay your equal share of the government's expenditures. My household income is in the top 20%, and I can't possibly pay the Government $56,608 for what it does. The $56K number is per person working. If we say that everyone who isn't making $56K doesn't have to pay taxes, suddenly we're talking about more than half the population paying no taxes, and the rest saddled with $112K per employed person. It's a spiral that ends in ruin -- because nobody can afford this. The point, as you know, is that nobody can afford this.

Regarding Corporate income: yep. Exactly. The point there of course is that even by double-counting, the tax load for Federal expenses only is MONUMENTAL. :-)

trogdor said...

No complaint with the argument, I just have a question about the data. When I go to the source, it says above the graph "Type of data: Percent or rate", which makes me think this is not 63.6 million people, but 63.6% of... whatever number that's based off of.

I just changed the dates back as far as it will go (1948), and I think that's it. Back then the number was 58.6 from a population of about 146 million. It sometimes seems like we've added 170 million people and only 5 million of them work, but I can't imagine that's possibly the case. I think if you find the right number and run the math again, it will still paint a really bad picture, so the overall point is still going to be valid.

What is evident from the expanded graph is that we seem to be in a decline. The participation rate grew steadily from 1948 to a stable high of about 66% from late 80s through about 2008, then has fallen precipitously to its current level (lowest since 1981). And it keeps going down (even as we're told the economy is doing just fine, thank you) as government spending continues to skyrocket, huge expenditure increases are ominously looming, and the ratio of (elderly receiving government benefits)/(young workers to pay for it) continues to increase and is about to explode.

So however the final numbers come out, it's going to be bad, and unless we're willing to make drastic (and painful!) changes, it's going to get exponentially worse.

Frank Turk said...

Gosh I hate you, Trogdor. But: so noted and amended.

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