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View Full Version : Private pay shrinks to historic lows as gov't payouts rise



Eric Johnson
05-25-2010, 11:28 AM
http://www.usatoday.com/money/economy/income/2010-05-24-income-shifts-from-private-sector_N.htm

http://tinyurl.com/2wushl6

By Dennis Cauchon, USA TODAY
Paychecks from private business shrank to their smallest share of personal income in U.S. history during the first quarter of this year, a USA TODAY analysis of government data finds.

At the same time, government-provided benefits from Social Security, unemployment insurance, food stamps and other programs rose to a record high during the first three months of 2010.

Those records reflect a long-term trend accelerated by the recession and the federal stimulus program to counteract the downturn. The result is a major shift in the source of personal income from private wages to government programs.

The trend is not sustainable, says University of Michigan economist Donald Grimes. Reason: The federal government depends on private wages to generate income taxes to pay for its ever-more-expensive programs. Government-generated income is taxed at lower rates or not at all, he says. "This is really important," Grimes says.

-more-

Gerry Clinchy
05-25-2010, 12:03 PM
"This is really important," Grimes says.


Well, I should guess it is! The govt only has the $ that it collects from taxes and fees. It shouldn't take a university economist to figure it out :-)

depittydawg
05-25-2010, 12:03 PM
http://www.usatoday.com/money/economy/income/2010-05-24-income-shifts-from-private-sector_N.htm

http://tinyurl.com/2wushl6

By Dennis Cauchon, USA TODAY
Paychecks from private business shrank to their smallest share of personal income in U.S. history during the first quarter of this year, a USA TODAY analysis of government data finds.

At the same time, government-provided benefits from Social Security, unemployment insurance, food stamps and other programs rose to a record high during the first three months of 2010.

Those records reflect a long-term trend accelerated by the recession and the federal stimulus program to counteract the downturn. The result is a major shift in the source of personal income from private wages to government programs.

The trend is not sustainable, says University of Michigan economist Donald Grimes. Reason: The federal government depends on private wages to generate income taxes to pay for its ever-more-expensive programs. Government-generated income is taxed at lower rates or not at all, he says. "This is really important," Grimes says.

-more-

I'd say it isn't a trend as much as a reaction to current economic conditions. During any recession, let alone one as serious as this one, government expenditures will increase while the private sector declines.
There are other forces at play here however. NAFTA and other 'trade' treaties have served to undermine the US worker and drive down wages. Attacks on labor are a generation old now and have also taken their toll on real wages and benefits.
Most, if not all of these declines have been picked up by federal spending. When the largest corporations on the planet don't pay livable wages or offer health benefits, (can you say Walmart etc. ) the government picks up the tab. (externalize costs; internalize profits).
I do agree that the federal government needs to shrink and reduce spending. The scope and influence of the Federal Government is way out of control. However, social programs cannot be eliminated until something else fills the void.

Henry V
05-25-2010, 12:25 PM
Those records reflect a long-term trend accelerated by the recession and the federal stimulus program to counteract the downturn.
This is a surprise? How come you weren't posting this stuff a couple years ago?

Here is information for 2008: http://www.usatoday.com/money/economy/2009-09-10-census-healthcare_N.htm and http://www.davemanuel.com/2009/09/10/median-household-income-in-the-united-states-falling-off-a-cliff/

and, here is a report from 2007. http://thepoliticsofdebt.com/?p=261
http://thepoliticsofdebt.com/wp-content/uploads/2007/12/image-thumb21.png
here is the long term trend noting the impacts of recessions.
http://upload.wikimedia.org/wikipedia/en/thumb/5/5d/Household_income_65_to_05.png/500px-Household_income_65_to_05.png
and here is the distribution of income. Note that the majority of households make less than $50K.
http://upload.wikimedia.org/wikipedia/en/thumb/8/8f/Personal_Household_Income_U.png/335px-Personal_Household_Income_U.png

I wonder if there is any relationship to the fact that tax rates are at there lowest since 1950?
http://www.usatoday.com/money/perfi/taxes/2010-05-10-taxes_N.htm

Federal, state and local income taxes consumed 9.2% of all personal income in 2009, the lowest rate since 1950, the Bureau of Economic Analysis reports. That rate is far below the historic average of 12% for the last half-century. The overall tax burden hit bottom in December at 8.8.% of income before rising slightly in the first three months of 2010.

dnf777
05-25-2010, 12:39 PM
I wonder if there is any relationship to the fact that tax rates are at there lowest since 1950?

that's a screwy statistic! Hard to believe, but I suppose true.

Henry V
05-25-2010, 12:52 PM
that's a screwy statistic! Hard to believe, but I suppose true.
Just the facts....Maybe the title of this thread could be changed to: "private pay shrinks to historic lows as gov't payouts rise and tax rates shrink to historic lows after the Great Recession".

Marvin S
05-25-2010, 01:10 PM
http://www.usatoday.com/money/economy/income/2010-05-24-income-shifts-from-private-sector_N.htm

http://tinyurl.com/2wushl6

By Dennis Cauchon, USA TODAY
Paychecks from private business shrank to their smallest share of personal income in U.S. history during the first quarter of this year, a USA TODAY analysis of government data finds.

At the same time, government-provided benefits from Social Security, unemployment insurance, food stamps and other programs rose to a record high during the first three months of 2010.

Those records reflect a long-term trend accelerated by the recession and the federal stimulus program to counteract the downturn. The result is a major shift in the source of personal income from private wages to government programs.

The trend is not sustainable, says University of Michigan economist Donald Grimes. Reason: The federal government depends on private wages to generate income taxes to pay for its ever-more-expensive programs. Government-generated income is taxed at lower rates or not at all, he says. "This is really important," Grimes says.

-more-

SS & the state portion of Unem are self funded, everything else is welfare! IMO they are apples & oranges to compare with welfare handouts.


Just the facts....Maybe the title of this thread could be changed to: "private pay shrinks to historic lows as gov't payouts rise and tax rates shrink to historic lows after the Great Recession".

You have a really unique way of viewing rubbish, so I'll offer this: If we are placed on this earth to help others, what exactly is the function of others? Maybe you can provide an answer?

Buzz
05-25-2010, 01:21 PM
that's a screwy statistic! Hard to believe, but I suppose true.




Amid complaints about high taxes and calls for a smaller government, Americans paid their lowest level of taxes last year since Harry Truman's presidency, a USA TODAY analysis of federal data found.
Some conservative political movements such as the "Tea Party" have criticized federal spending as being out of control. While spending is up, taxes have fallen to exceptionally low levels.

Federal, state and local income taxes consumed 9.2% of all personal income in 2009, the lowest rate since 1950, the Bureau of Economic Analysis reports. That rate is far below the historic average of 12% for the last half-century. The overall tax burden hit bottom in December at 8.8.% of income before rising slightly in the first three months of 2010.

"The idea that taxes are high right now is pretty much nuts," says Michael Ettlinger, head of economic policy at the liberal Center for American Progress. The real problem is spending,counters Adam Brandon of FreedomWorks, which organizes Tea Party groups. "The money we borrow is going to be paid back through taxation in the future," he says.


The entire article is here:

http://www.usatoday.com/money/perfi/taxes/2010-05-10-taxes_N.htm

Buzz
05-25-2010, 01:23 PM
This is a surprise? How come you weren't posting this stuff a couple years ago?

Here is information for 2008: http://www.usatoday.com/money/economy/2009-09-10-census-healthcare_N.htm and http://www.davemanuel.com/2009/09/10/median-household-income-in-the-united-states-falling-off-a-cliff/

and, here is a report from 2007. http://thepoliticsofdebt.com/?p=261
http://thepoliticsofdebt.com/wp-content/uploads/2007/12/image-thumb21.png
here is the long term trend noting the impacts of recessions.
http://upload.wikimedia.org/wikipedia/en/thumb/5/5d/Household_income_65_to_05.png/500px-Household_income_65_to_05.png
and here is the distribution of income. Note that the majority of households make less than $50K.
http://upload.wikimedia.org/wikipedia/en/thumb/8/8f/Personal_Household_Income_U.png/335px-Personal_Household_Income_U.png

I wonder if there is any relationship to the fact that tax rates are at there lowest since 1950?
http://www.usatoday.com/money/perfi/taxes/2010-05-10-taxes_N.htm

Yet the AVERAGE family income is $102,000. But you know, Bill Gates and Warren Buffet are included in figuring the average.

What is really interesting is the numbers for median income. Was it $35,000 in 1967? Those must not be in 1967 dollars. I wonder what the term "real" means in relation to that graph?

depittydawg
05-25-2010, 01:34 PM
that's a screwy statistic! Hard to believe, but I suppose true.

From what I have seen and heard, Tax rates are the lowest on the Top 1% or so of net worth individuals(note I did not say net income individuals). Which I'd be willing to bet doesn't include anybody on this board. Taxes on the middle class are higher than they have ever been. Also net taxes on corporations are at a low point.

Henry V
05-25-2010, 10:57 PM
From what I have seen and heard, Tax rates are the lowest on the Top 1% or so of net worth individuals(note I did not say net income individuals). Which I'd be willing to bet doesn't include anybody on this board. Taxes on the middle class are higher than they have ever been. Also net taxes on corporations are at a low point.

Not true at the federal level. Middle income tax rates are also very low. http://www.cbpp.org/cms/index.cfm?fa=view&id=3151

The tax burden has shifted dramatically as a result of the two large tax cuts under the previous administration. http://www.washingtonpost.com/wp-dyn/articles/A61178-2004Aug12.html

depittydawg
05-25-2010, 11:50 PM
Not true at the federal level. Middle income tax rates are also very low. http://www.cbpp.org/cms/index.cfm?fa=view&id=3151

The tax burden has shifted dramatically as a result of the two large tax cuts under the previous administration. http://www.washingtonpost.com/wp-dyn/articles/A61178-2004Aug12.html

Personally I'm not concerned as to which level the taxes are collected. The only thing that matters is overall tax paid. And, even more important than that, how the Government allocates the dollars it collects.
State and local taxes have increased significantly as federal taxes have been squandered and passed out as corporate perks instead of funding the myriad of mandates now required by Federal Law. The best example is Social Security. Had the Federal Government not used SS collections to fund Wars and other Budgetary overflows since the Johnson administration, the SS program would still be in the black for as far as the eye could see.
In my state 25 years ago the overall tax contribution of Corporate entities was about 16.5% of the total taxes collected. Today that figure stands at about 6%. All the while the federal government has continued to invent mandates for the states to comply with. It's no wonder the tax burden on the middle class is so great at this time.