‘The Myth Of American Income Inequality’: The Federal Government Drastically Overestimates Earnings Disparity, Study Says | Eastern North Carolina Now

    Publisher's Note: This post appears here courtesy of the The Daily Wire. The author of this post is Ben Zeisloft.

    The federal government drastically overestimates income inequality in the United States by failing to account for certain welfare programs and income taxes on the wealthiest earners, according to a study released on Tuesday by the Cato Institute.

    The analysis, written by Cato Institute adjunct scholar John Early, says that official statistics fail to account for more than two-thirds of transfer payments provided to low-income households and do not consider income loss from taxes, which average 35% of income for the wealthiest quintile of taxpayers. Poverty counts are 10 times higher than the true figure, while income inequality is overestimated by a factor of four, according to the study.

    The Census Bureau's official accounting method "excludes $1.9 trillion given to households in transfer payments and pretends that the $4.4 trillion that households pay in taxes is really income," Early explained in an interview with The Daily Wire, "even though they usually never even see that money and can certainly never use it for the benefit of their families."

    If officials were to calculate income inequality while considering more transfer programs - including food stamp debit cards, bills paid by Medicaid, and checks that provide refundable tax credits in excess of tax liabilities to low-income households - earned income in the bottom quintile would rise by 700%, while earned income in the second quintile would rise by 70%, the study says.

    Meanwhile, Early says the Census Bureau neglects to consider that only 7% of income in the bottom quintile is lost due to taxes, while 35% of income is lost in the highest quintile.

    "Too many political and career bureaucrats ignore and even deny the existence of this prima facie evidence because if the data show a large gap of inequality, that gap will justify their existence to administer money to fill the gap," Early, who served twice as assistant commissioner at the Bureau of Labor Statistics, continued. "Then, because the new spending is not counted as income, they are able to demand still more spending. The cycle is repeated over and over again."

    Indeed, many lawmakers have cited earnings disparity as justification for more federal social programs. Rep. Alexandria Ocasio-Cortez (D-NY) has argued for a 70% marginal income tax for earnings above $10 million per year to "stem runaway income inequality," which purportedly accrues as "wealth begins to automatically compound at obscene rates for the extremely rich." Last year, Sen. Bernie Sanders (I-VT) contended that "massive wealth and income inequality" justified passing a reconciliation bill through Congress.

    The study nevertheless argues that welfare programs' introduction of incentives to work less place upward pressure on income inequality, especially as others toward the top of the income spectrum increase their productivity through education and more rigorous work. Other social trends, such as the reality that highly educated earners tend to marry one another, further contribute to reported income inequality.

    "That added spending, of course, sends yet more money to the lower-income households while taxes take more from the higher incomes. And, as a side effect, this process enriches those who administer the programs," Early added. "A whole industry feeds off these growing transfer payments, and it has a vested interest in continuing to use methods that belie the vast improvement of wellbeing for almost all Americans."

poll#162

In what may be the most divisive period in modern American History, even more divisive than the turbulent sixties due to today's lack of patriotism, consider what are the major catalysts causing so much of this calamity of conflict, and vote: What most instigates the division of America, on this day September 20, 2022?

  Racism within our society

  Sex realignment to the detriment of our society.

  Biden /Harris Wide Open Southern Border Policy for the Demographic Upheaval of OUR Constitutional Republic

  Rampant Crime in Democratic controlled cities, and the possible contagion elsewhere

  Covid Pandemic, and its mishandling at the political, and bureaucratic levels.

  The unresolved questions /allegation regarding the flawed 2020 General Election

  January 6th Riot or "Armed Insurrection", depending upon patriotic perspective

  Joe Biden as Divisive Leader; Ineffective and Corrupt Executive

  Failed Education Industry, from an overall perspective, regarding all levels of education.

  Propagandistic Media in complete conflict with the First Amendment's guarantee of Freedom of Speech, and the awesome responsibility of a Free Press..

  "Orangeman Bad!"

  Bureaucracy rushing to a behemoth size, its unjustified expense, and far too often overreach.

  The Weaponized Deep State for political purposes

  A secular ambivalence to all that is real.

  Record number of overdose deaths from opioids and now Fentanyl

  Biden Administration's disastrous Foreign Policy

  Bidenflation /supply chain failure inevitably evolving into stagflation and recession.

  "Ultra MAGA Extremists" freely speaking louder AND LOUDER!

928 total vote(s)     What's your Opinion?

poll#154

Inarguably, the policies of the Democrats in congress and Joe Biden as the Executive is plunging the United States into a recession, if we are not already there; a recession that was completely avoidable. Will abrupt changes in policies occur in time?

  Yes, the Democrats have a bold plan, yet to be revealed, to save us.

  No, there will have to be a complete undoing of the damage done by these Democrats.

  I can't do simple math, so how am I to understand the concept of basic economics.

1,216 total vote(s)     What's your Opinion?