|
Average Incomes Fell for Most
in 2000-5
DAVID CAY JOHNSTON
NY
Times
Tuesday Aug 21, 2007
Americans earned a smaller average income in 2005 than in 2000,
the fifth consecutive year that they had to make ends meet with
less money than at the peak of the last economic expansion, new
government data shows.
While incomes have been on the rise since 2002, the average income
in 2005 was $55,238, still nearly 1 percent less than the $55,714
in 2000, after adjusting for inflation, analysis of new tax statistics
show.
The combined income of all Americans in 2005 was slightly larger
than it was in 2000, but because more people were dividing up
the national income pie, the average remained smaller. Total adjusted
gross income in 2005 was $7.43 trillion, up 3.1 percent from 2000
and 5.8 percent from 2004.
Total income listed on tax returns grew every year after World
War II, with a single one-year exception, until 2001, making the
five-year period of lower average incomes and four years of lower
total incomes a new experience for the majority of Americans born
since 1945.
(Article continues below)
The White House said the fact that average incomes were smaller
five years after the Internet bubble burst “should not surprise
anyone.”
The growth in total incomes was concentrated among those making
more than $1 million. The number of such taxpayers grew by more
than 26 percent, to 303,817 in 2005, from 239,685 in 2000.
These individuals, who constitute less than a quarter of 1 percent
of all taxpayers, reaped almost 47 percent of the total income
gains in 2005, compared with 2000.
People with incomes of more than a million dollars also received
62 percent of the savings from the reduced tax rates on long-term
capital gains and dividends that President Bush signed into law
in 2003, according to a separate analysis by Citizens for Tax
Justice, a group that points out policies that it says favor the
rich.
The group’s calculations showed that 28 percent of the
investment tax cut savings went to just 11,433 of the 134 million
taxpayers, those who made $10 million or more, saving them almost
$1.9 million each. Over all, this small number of wealthy Americans
saved $21.7 billion in taxes on their investment income as a result
of the tax-cut law.
The nearly 90 percent of Americans who make less than $100,000
a year saved on average $318 each on their investments. They collected
5.3 percent of the total savings from reduced tax rates on investment
income.
The I.R.S. data showed that the number of Americans making less
than $25,000 a year shrank, down by 3.2 million, or 5.5 percent.
Nearly half of Americans reported incomes of less than $30,000,
and two-thirds make less than $50,000.
The number of taxpayers making more than $100,000 grew by nearly
3.4 million and accounted for more than two-thirds of the growth
in the number of returns filed in 2005 compared with those in
2000.
The fact that average incomes remained lower in 2005 than five
years earlier helps explain why so many Americans report feeling
economic stress despite overall growth in the economy. Many Americans
are also paying a larger share of their health care costs and
have had their retirement benefits reduced, adding to their out-of-pocket
costs.
The White House noted that during the same five years, income
tax rates have been cut under a series of laws sponsored by President
Bush. Mr. Bush has delivered a steady stream of upbeat assessments
of the economy, saying last fall, for example, “I’m
pleased with the economic progress we’re making.”
Tony Fratto, a White House spokesman, attributed the drop in
average incomes to “the significant wrenching hits that
our economy took in 2001 and 2002, so no one should be surprised
that what a bubble economy created in the late 1990s and 2000,
where economic data were skewed, would take some time to recover.”
Mr. Fratto said the fact that nearly all of the growth in incomes
was among those in the upper reaches of the income ladder and
that the majority of investment tax breaks went to those making
more than $1 million “is not a very interesting story.”
“There is no question that you will always have distributional
concerns with a tax rate, a broad-based tax rate, at the very
top of the income scale,” Mr. Fratto said.
He said the more significant issue was the reduction in taxes
for middle-class Americans that Mr. Bush won from Congress.
Robert S. McIntyre, the director of Citizens for Tax Justice,
said that even though he expected a few very wealthy people to
reap most of the tax savings generated by lower tax rates on dividends
and capital gains, the size of the savings “still takes
your breath away.”
He said the tax savings at the top, combined with lower average
incomes after five years, “shows that trickle down doesn’t
work.”
|
INFOWARS:
BECAUSE THERE'S A WAR ON FOR YOUR MIND
|
|
