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Sunday, November 24, 2019

Tax Cut of December 2017 -- Did it Help?

      Did the Trump/Republican Tax Cut of 2017 Help?

During his State of the Union address of 2018 Trump predicted an additional $4,000 of income to all workers would result due to the tax cut. After 22 months the Bureau of Labor Statistics shows that wages for nonsupervisory workers, 80% of all workers, have increased by $1,145 after 22 months, since January 2018, an increase of 2.7%, from $42,302 to $43,447. But this is smaller than the increase between January 2014 and January 2016, when these incomes increased by 4.9% or $1,970 over two years. There was no massive tax cut in 2014.   (As a side note, this BLS site will also show that wages for 80% of workers was higher in 1965 than in 2019.) And this link shows "median" not average weekly nominal earnings for the same group, more or less same story. 

Has it raised the national debt enormously? Yes. Did the tax cut pay for itself? Not at all. 
In August, 2019, the CBO predicted the national debt will rise to 95% of GDP by 2029, from 75% in 2016. That is an increase of $4.6 trillion, or an increase of $27,545 for every worker, and that’s not counting interest on the debt. This new debt cancels any gains in income. In the past two years, the national debt has increased at 150% the rate of Obama’s last five years in office. At ITEP.org the article “The TCJA by the Numbers” runs down the precise cuts to each income group. The top one percent received a $49,980 cut, the middle 20% a $780 cut. 

The tax act has spurred enormous stock buybacks. In 2018 large corporations spent over $1 trillion of profits on buybacks. If instead they had increased employee pay, then 61 million workers, employed in companies employing more than 500 workers, would have received a raise of $16,300. The number of full-time workers is double the 61 million, around 120 million. If the 30 companies comprising the Dow Jones Index had not purchased stock but increased wages, then each of their eight million employees would have received $46,000 in added pay.

I invite readers to read the rest of this letter at my blog: http://benL88.blogspot.com, or Economics Without Greed, Part Two. The main idea is that we are truly a very fortunate and prosperous nation, but we fail to lift up the lower half of workers and households; there is far too much poverty and hardship. The United Way charity reports in the ALICE report that 40% of U.S. citizens experience hardship; they go without basic needs. Tax cuts will not create a vibrant middle class, only difficult restructuring of our economy will do it. 

Half of Americans report hardship, the finding of an October, 2019, poll:

Reaffirming the findings of the ALICE report from the United Way charity is this recent poll from the Center for American Progress  Importantly it reports, "In addition, the study finds strong support across party lines for economic narratives focused on “taking back our government from wealthy special interests”; making sure government “works for all people”; and finding political leadership committed to “uniting people” around “simple goals we all share.”"

What to read next? 
First read the blue quotation just below, and then Jump Down, reader, to the next essay -- A Litany of Economic Woes -- before trying to wade through the next paragraphs here. The Woes essay was published at inequality.org, a newsletter with thousands of readers in November. I think they chose it because it rapidly covers important core  strands. The remainder of the discussion here gets into the fine details, the weeds. Stay out of the weeds for now, come back if you are, like me, detail crazy.

Here's a bit more on the tax system.

By far the most important knowledge about the present economy can be found in a radio interview with U.C. Berkeley professor Emmanuel Saez, a colleague of Thomas Piketty author of Capital in the 21st Century. This interview is on the Doug Henwood program Behind the News (see here, Nov. 7, 2019). Saez (with U.C. professor Zucman) recently discovered that the effective tax rate for the wealthiest 400 Americans is 23%, a tad lower than the rate for the lower-earning 50%, whose incomes average to $18,500 a year per adult. The 400 had incomes averaging around $335 million and paid a lower tax rate. I've read an article by M. Yglesias, and another at the NYTimes. That's plenty. The average income for the top 400?  This article at CBS News says the average was $335.7 million per, and the total therefore is $134 billion for 400 households! This paragraph from the NYTimes article sums it up:
The American economy just doesn’t function very well when tax rates on the rich are low and inequality is sky high. It was true in the lead-up to the Great Depression, and it’s been true recently. Which means that raising high-end taxes isn’t about punishing the rich (who, by the way, will still be rich). It’s about creating an economy that works better for the vast majority of Americans.  
The radio broadcast is well done, a reminder.

I think most readers will learn more from my next essay, The Litany of Woes, than from my further comments on the TCJA. So my two comments will be short.
One, a professional article from the Economic Policy Institute demonstrates the failure of the TCJA to increase investment; it shows the declines in "nonresidential fixed investment" and in "nondefense capital goods orders". These were touted as the drivers of greater incomes for workers. The BEA.gov shows higher GDP growth since December 2017, but it has since fallen back to a more normal rate and the CBO report predicts a 1.8% growth to year 2029. The boost appears to be temporary, ephemeral, related to higher consumption. The cost of this short boost is massive government debt.

The second issue relates to excessively high tax rates on middle income families. About 20% of middle earning American families, one in five, are being taxed into a level below 4 times the poverty threshold. They need a tax break, a real cut. As reported above the TCJA gave middle income households a $780 tax cut, but in the table below I show they pay about $18,000 a year in total taxes. They need a real cut. The Supplemental Poverty Measure publishes a graph of the "official" poverty report income groups and compares it to the SPM post-transfer post-tax income groups. Here is the important summary shot:


The group at the right, over 4.00 times poverty threshold, the blue box, the pre-tax income represents  41.9% of the population, and in red it's at 22.4%, just above half the population of the first blue group, or one in five families. That means this section of households are taxed below 4 times poverty. I asked myself what incomes would those be?
Four times poverty for 2018 is as follows                           post-tax income
                                         blue box                                         red box                      
            for one person above $48,560                              $35,206
                  two persons above $65,840                            $47,734
            for three persons above $83,120                           $60,262
            for four persons above $100,400.                         $72,790

A four person family with $100,400 pre-tax income is exactly 4 times poverty threshold, and after-tax it is below the 4 times level. That family's taxes are too high.

I took the "overall and effective" tax rate of 27.5% from the ITEP report "Who Pays Taxes in America in 2019?" "Overall" means taxes paid to federal, state and local. "Effective" means as a percentage of total income. Let's look at the lowest earning 20% of U.S. taxpayers; their average pre-tax income in 2018 was $13,700; they paid 7.5% to the federal government and 12.7% to state and local for an overall effective rate of 20.2%. That reduces their income by $2,767 giving them a post-tax income of $10,933.
To be really precise I look to the U.S. Census report HINC01 to find the median pre-tax incomes for each of these family sizes.
                                                                 pre-tax                   O.E. taxes         post-tax income
                                                                 median income                                median income
                          for one person                $31,954                     $6,454                 $25,500
                          for two                            $70,870                   $19,489                 $51,381
                          for three                          $82,139                   $22,588                 $59,551
                          for four                           $97,522                   $26,818                 $70,704

In only the two person household is the median post-tax greater than the 4 times poverty amount.
It looks to me that the before-tax middle or median income is about the same as the before-tax "four times poverty" income group, except for the one person household. Meaning? Those middle income families are being taxed too much, their post-tax incomes are all below the 4 times level. They were above the four-times level, except the one person household, and they drop below. They are mostly taxed below the 4 times level.

I look at my old blog, the last essay, the third graph showing income distribution, and it shows that 47% of all pre-tax income goes to the highest earning ten percent. The 90 to 99 percentiles have an average income of $193,000 and the top one percent has income average of $1,300,000 per adult I believe, not per household. The tax rate on high income households, 33.7%, is not much higher than on the middle group, 27.5%, the ITEP.org report shows.

It should also be remembered that the poverty thresholds are very low according many researchers, who maintain that the true poverty level is about 150% of their actual levels, and approximately 27% would be in poverty if that were the official threshold. I read a 2013 article, "Undercounting the Poor", in Dollars and Sense magazine by a professor at UMass/Amherst, Jeannette Wicks-Lim, who wrote, "But this [too low poverty threshold] conflicts with what we know about the economic deprivation that households experience. In the 1999 book Hardship in America, researchers found that near-poor households (households between the poverty line and twice the poverty line) experienced one of more "critical" hardships -- such as missing meals, not getting necessary medical care, or having their utilities disconnected -- at only slightly lower rates than the officially poor (25% compared to 29%). Only when household get above twice the poverty line does the incidence of these economic problems fall substantially -- all the way down to 11%. Twice the poverty line (or about 150% of the SPM) appears to be an excellent marker for when households can meet their basic needs." The 2019 SPM report, covering year 2018, shows that 27.8% of Americans live below 150% of the poverty threshold (Table A-4, page 26). This conforms with the assessment I presented elsewhere from Kathleen Short, long-time researcher for the U.S. Census, who stated that 140% of the poverty threshold was true poverty, and those living at that level or below are "unable to achieve a safe and decent standard of living."
                         
The Joint Committee on Taxation, 2018, shows that 65.5% of households make less than $75,000 and they are taxed from above 4 times to below 4 times the poverty level. The SPM chart above states that only 22.4% of households have post-tax and post-transfer incomes above 4 times poverty. The $75,000 income family's tax rate, overall and effective, is around 27.5%; the top one percent pay 33.7% with incomes 25 to 36 times greater than the 4th quintile groups -- the average income $1,914,000 a year compared to $86,500. The one percent rate is higher by maybe a quarter (a quarter of 28% is 7%, add that to 28 and get 35%).

These middle income households are taxed into the lower income group of 2.00 times to 3.99 times poverty. How many? About one in five, 19.5% of the nation, or 24,960,000 households and that would also be about 65 million citizens, fall into this group. It's an income of about $75,000, very roughly. See that table at "Who Pays Taxes in America in 2019?" published by ITEP.org.

Further on, next essay, I show that the lower-earning 50% receives $1 of income while the top one percent receives $81. The average yearly income for the lower half is $16,200 and for the top 1% $1.3 million, a 1 to 81 ratio. Such a startling ratio, but their "overall effective" tax rate is not that much greater, 22% compared to 33.7%.

A WEALTH TAX IS A GOOD IDEA
I hate to go on, but I must. Wealth -- we need a wealth tax. Since January 2009 wealth has doubled, even though the economy in the past ten years sputtered and disappointed millions. The "household net worth" has increased from $48 trillion to $113 trillion, a $65 trillion gain (see the Federal Reserve report Flow of Funds page 2 and Table 101, and see the 2010 report to find the $48 trillion figure), and adjusting for inflation that is a 95% increase. The $65 trillion gain is -- so big it cannot be imagined. Briefly, each individual in the top one percent has an annual cash income of $1.3 million (see the graph at my past blog that I mentioned above) and an added $0.9 million in non-realized capital gains for a total per adult income of $2.2 million (I won't show you the math, but I believe I did it right.) I imagine most of these one percenters live in a married condition and their household income is double the $2.2 million for one person income, or it is $4.4 million a year -- annual household income. And without a major collapse of the stock market, which is somewhat likely but not guaranteed, they will continue to be taxed at 33.7% yearly, just above 27.5% that an income of $86,500 is taxed. An income of $4.4 million is 51 times that of $86,500.  !!!  Fair?  Even if I overstated the income, it's important to realize the effect of a dual income, that of cash and that of investment (unrealized) income.    Warren and Sanders have it right.

Here's a quote from Thomas Piketty, the famous economist from France, on the need for higher tax rates on the richest: Between 1930 and 1980, the rate applied on the highest incomes was on average 81% in the United States, and the rate applied to the highest inherited estates was 74%. Clearly this did not destroy American capitalism, far from it. It made it more egalitarian and more productive, at a time when the United States had not forgotten that it was their level of educational advancement and their investment in training and skills that was the backbone of their prosperity, and not the religion of property and inequality.
The true wealth are the people, their skills, tools, and ethical standard of culture  --  sense of fairness, willingness to care, help, deal justly with one another. It's not a dollar amount. The entire world is now caught up in this underlying problem and dilemma. We need to share our prosperity and save the planet from carbon asphyxiation at the same time.

Friday, August 9, 2019

A Litany of Economic Woes

Every couple of weeks I add short supplements -- 
so check below for the highlighted add-ons.


                      A Litany of Economic Woes

As one who writes often about the economy, and often hears gasps of bewilderment and groans of boredom, I have tried to find ways to entice readers into the subject matter. But there is no corny joke to start this essay off. A litany is a list, and 8 items should give the reader a quick oversight of the failing economy. Added is a list of 4 reforms, simple and common sense. So let’s plunge in. 

1. The “average weekly earnings” of eighty percent of U.S. workers was higher in 1965, 54 years ago,  than in 2019, reports the Bureau of Labor Statistics



2. The average income for all Americans has nearly tripled since 1965, 54 years ago, states the Bureau of Economic Analysis, Department of Commerce (Table 2.1, Disposable Personal Income per capita). It was $15,052 in 1964, today it is $44,455. Economic growth of the past 54 years has improved the lives of only a minority. Between 1973 and 2007 58.7% of growth was captured by the top one percent, is the finding of a report titled “The New Gilded Age.” (page 4, pdf version)

3. In the past ten years, 2009 to 2019, total private household wealth has doubled, increasing from $48 trillion to $108 trillion, states the Federal Reserves report “Flow of Funds” (page 2, and page 104). While wealth doubles, economic growth for the decade was slower than any preceding decade since 1950. While private wealth increased by nearly $60 trillion, the federal government’s expenditures were $41 trillion. Although the average savings per adult stands at $403,974, half of all adults own less than $62,000, or 15% of the average, and the lower half owns just 1.2% of all wealth. Wealth is highly concentrated, and even more than before.  

4. The average savings per adult is over $400,000, but 40% of adults report they would be unable to pay a $400 emergency expense within a 30 day period, states the Federal Reserve report on Household Well Being

5. The combined yearly wage income of half of U.S. workers, 82 million workers, amounts to less than 8% of the national income, states the Social Security Administration report on wage income. An income of less than $25,000 a year is earned by 42% of U.S. workers, and their average yearly income is $10,687.

6. The United Way charity reports, in its ALICE report, that 40% of U.S. households cannot afford seven basics of life: food, housing, utilities, transportation, phone service, health care, child care. And 40% of workers earn less than $15 an hour. The Federal Poverty Level for a family of four, $23,850 in 2014, comes to just 42% of the ALICE Basic Survival Budget for this family, $55,381. 

7. Over half of U.S. workers are employed in firms employing more than 500 employees, states the Small Business Administration. A study of the use of profits of the largest 500 corporations over a ten year period shows that 93% of profits were disbursed as stock dividends or stock “buybacks”, leaving little for research or employee wage raises. In 2018 over $1 trillion of profits were used for corporate stock buybacks. If instead of spending the trillion on buybacks corporations had increased employee pay, then for 61 million workers employed in companies with over 500 employees, each worker would have received a raise of $16,300. If the 30 companies comprising the Dow Jones Index had not purchased stock but had spent the money on wage increases, then each of the eight million employees would have received $46,000 in added pay. This article is thoroughly researched; here's a quote: "Nike, Coca-Cola and Visa each could have quadrupled the pay of their median employee with the cash they sent to shareholders. Nike paid a median wage of $24,955, which is under the poverty threshold for a family of four, but spent $58,194 per worker on share repurchases and $17,004 per worker on dividends. Coca-Cola paid a median wage of $47,312 but gave shareholders $162,136 per employee."

8. In 2013 one of the authors of the U.S. Census’s Supplement Poverty Measure wrote (on page 30) that 30% of U.S. families would be characterized as not able “to meet its basic needs and achieve a safe and decent standard of living.” This is a definition of poverty. 

This litany is startling and depressing. It’s a picture of a society drowning to death. What might we as a society do? 

Another list, much shorter: 

1. A raise of the minimum wage would affect the 69 million workers earning less than $25,000 a year. 

2. Passing the Protecting the Right to Organize (PRO) Act would enable at least 61 million workers, those who labor in large corporations, to negotiate for higher pay.

3. Creating national corporate charters for the largest companies, and passing the “Reward Work Act” would require “public companies to allow workers to directly elect one-third of their company’s board of directors.”

4. Creating a large publicly funded infrastructure project, such as the Blueprint plan outlined by the Center for American Progress, would tighten the labor market, raise wages and employment, and pay living wages to all employed in it. The Green New Deal mentions the potential for this approach. 

The true wealth of a nation is not money, but lies in its population, its human assets, their training, skills, and opportunities. The two reforms most needed are to 1) lower key household expenses, such as  housing, medical care and child care, and 2) create a tight labor market with full employment combined with workers’ rights to bargain for higher wages. If we could achieve the income distribution ratios of the years between 1946 and 1980, then ninety percent of households would, on average, enjoy a $20,000 rise in their incomes. This benign ratio is not a new concept, it existed for about 40 years. That would eliminate poverty and re-create the broad middle class that we’ve lost.  
___________________________________________________________
Notes: October 31, 2019: 
Income distribution re-visioned. 
and
Notes: Added Graphic, November 14, 2019

____________________________________________________________________________________________________
                        INCOME DISTRIBUTION CLARIFIED

In the table (Table 1, page 40) from the Saez, Piketty, Zucman report we see that the lower-earning 50% receives 12.5% of all pre-tax income, and the top one percent receive 20.2%. The differential is one to 81. To grasp this more clearly, imagine that the entire national income is $400, and ask how much does each adult receive. The following is the answer.
Each of the lower 50% receives a dollar. The group from the 50th to the 90th percentile receives $4 each.
The next 9 percent, 91st to 99th percentile, receives $12 each, and the last one percent receives $81.  

                    Distributing Income in U.S.A.
         Too Unequal !

     The lower half      the next 40 percent       the 91 to 99 group      the top One percent
      each earns           each earns                    each earns                  One earns
      one dollar            four dollars                 12 dollars                    81 dollars

                  When 50 earn $1, that’s $50                  12.5% to the lower half
                  When 40 earn $4.05, that’s $162           40.5% to percentiles 51 to 90
                  When 9 earn $12, that’s $108                26.8% to percentiles 91 to 99 
                  When 1 earns $81, that’s $81                20.2% to the Top One Percent
                                     TOTAL   $401             100.0%

   $ ONE to 50         $ Four to 40              $ 12 to 9                      $81 to ONE


The authors write: "Today they earn 81 times more. This ratio of 1 to 81 is similar to the gap 
between the average income in the United States and the average income in the world’s 
poorest countries, among them the war-torn Democratic Republic of Congo, Central African Republic, and Burundi.”

ONE  ———  FOUR————TWELVE————EIGHTY-ONE
for 50                       for 40                   for 9                                  for 1     
           X                 XXXX          XXXXXXXXXXXX              X XXXXXXXX
                                                                                              XXXXXXXXX
                                                                                              XXXXXXXXX
                                                                                              XXXXXXXXX
                                                                                              XXXXXXXXX
                                                                                              XXXXXXXXX
                                                                                              XXXXXXXXX
                                                                                              XXXXXXXXX

                                                                                              XXXXXXXXX


Sorry it's fuzzy; the best I can do. I copied it a second time for less fuzz.

I've re-ordered the income distribution table from the study by Piketty, Saez and Zucman. For 2014 they show the income percentages going to income groups; I transferred those group percentages to average income going to each group member.  For instance the lowest-earning 50% of American adults in 2014 earned 12.5% of all income. If there were only 100 workers and together they earned $401 in 2014, then each of the lower-earning 50 would earn $1. It is more starkly unequal to see the 
XXXs . My data comes from the Saez, Piketty, Zucman study of 2016, Distributional National Accounts, Table 1 (NBER Working Paper 22945). A companion article is Economic Growth in the United States, A Tale of Two Countries.

The authors took tax records and found out every taxpayer's income over 30 years and more. 
In 1980, the lower-earning half the U.S. population had an income of $16,000, but in 2014 it had increased by 1% to $16,200. No growth. 
Then the next 40 percent, from 51 to 90 percentiles, saw 40% average growth in 34 years, from an average income of $50,000 to $70,000. This group also captured 32% of all the growth in 34 years. 
The top 91 to 99 percentile saw growth of 120% and they captured 32% of all growth. 
The top 1% had income growth of 210%, tripling. The one percent’s average income jumped from $425,000 to $1.3 million. They captured 36% of all growth.  
I should remind readers that the study published at EPI.org, The New Gilded Age states that 58.7% of all growth went to the top one percent between 1973 and 2007, slightly different. See page 4 of the pdf version.   


The pattern in the distribution of income growth reversed itself from 1973 to 2007, with over half (58.7 percent) of all income growth concentrated in the hands of the top 1 percent of families. 

This "Gilded Age" report is daunting. They report on the 2015 income distribution in all 3061 counties in the U.S. In Teton County, WY, the one percent receive 59.0% of all income, and half way down, #1531, in Jefferson, Tennessee, they receive 11.7%, and at the bottom, #3061, in Valdez Cordova, Alaska, they receive 5.1%. 

Now, back to the Saez, Piketty, Zucman report.
From that basic info I looked at Table 1, the first page after page 39, and I transferred 12.5% of income into average income under the hypothetical that 100 workers earned $401 that year. The average income per person in the lower 50% was 1 dollar. 

For every one dollar earned by the lowest 50,   
                                        $1
   the next 40 earned $4, 
and    the next 9 earned $12
and  the final 1% earned $81.        How do you like that? 


The authors write: "Today they earn 81 times more. This ratio of 1 to 81 is similar to the gap between the average income in the United States and the average income in the world’s poorest countries, among them the war-torn Democratic Republic of Congo, Central African Republic, and Burundi.

In year 1980 the differential between the 50% and the top 1% was 27 times; the ratio tripled to 1 to 81 between 1980 and 2014. 
This is pre-tax income. The post-tax income is more equal and the gaps or differentials are smaller by about half. Government social benefit transfers make a difference.  


My critique of capitalism is simply that community is destroyed when income is  extremely unequal. Democracy and liberal values are destroyed. I'm reading James Crotty's book "Keynes Against Capitalism", published 2019, and Crotty shows Keynes making much the same criticism.                 
My disenchantment also stems from the fact that so few get the real picture. 
You can view a bar graph of this income distribution at my old blog, the June 2018 essay, see the third graph, the blue one from Olivier Giovannoni's study. 

Another rarity not regularly reported has to do with
          income share lost to the lower-earning 90% of taxpayers                               since 1965.

                            

The share of income of the top 10% was below 33% between years 1943 and 1981. In 1965 the share was 31.5%, while in 2017 it was 47.9%, a shift of 16.2%. How much is 16.2% of disposable income in 2019? The BEA.gov table shows total disposable income, for Q3 2019, at $16.572 trillion.
16.2% of $16.572 trillion is $2.684 trillion. If the lower 90% had maintained its income share, then each household among the 115 million would have an
                   income increase averaging $23,321 -- after taxes.
Call it an increase of $27,265 before federal taxes. 
 The gain is incredible. Adding the $23,321 to all 90% would mean --
          The average income for the
                            first quintile is        $13,700, it would be $37,021
                            second quintile is    $32,200, it would be $55,521
                            third quintile is        $52,900, it would be $76,221
                            fourth quintile is      $86,500, it would be 109,821.
This would eradicate poverty in the U.S.

And I can't do the last 10% up to the 90% percentile, as the data from the ITEP site, the table at the end of the report "Who Pays Taxes in America in 2019?" does not separate out that data.
The median income for 2018 would be not $63,179 but $86,500. Mostly the top 1% would lose income.
My previous blog, Economics Without Greed, has the same graph in the last essay, colored blue; it originated from a Levy Economic Institute report by Olivier Giovannoni, page 35, and it should be common knowledge.

This graph above included updated information to 2017 from the Top Income Data from the study "Income Inequality in the United States, 1913 to 1998". This interactive graph appears in the article "Unprecedented" published at the Economic Policy Institute, October, 2019.

The Conclusion of "The New Gilded Age" report states a similar finding:
The gains of those at the top have come at the expense of the vast majority of working families. The Economic Policy Institute’s The State of Working America, 12th Edition, found that between 1979 and 2007, had the income of the middle fifth of households grown at the same rate as overall average household income, it would have been $18,897 higher in 2007—27.0 percent higher than it actually was (Mishel et al. 2012).
Adjust that for inflation to 2019, the $18,897 becomes $24,025 -- more income to the middle fifth.

And economist James Cypher, writing in Dollars and Sense magazine in 2011, states the same conclusion,

Nearly $2 Trillion Purloined from U.S. Workers in 2009

The lower-earning 90% of U.S. households would enjoy an income increase of $17,391 for each.
But the actual increase today would be closer to $3 trillion, make it an increase of $26,086. That would end poverty. The question serious adults should ask, if it worked back then, 1946 to 1980, why can't we make it work now? Why? Why?  



Added November 17, 2019 :   
The ratio of income, 1 to 81, reported above is pre-tax. I became curious about the post-tax ratio and figured it out. To save readers the effort I'm just reporting the ratio, a proof would be wearisome for any reader. Below this brief paragraph I report on the wealth ratio, where the gap jumps. The pre-tax income ratio, the lower 50 to the top 1, is 1 to 81, as reported. The post-tax ratio is 1 to 40.2, meaning the social programs narrowed the differences, lowered poverty, and in general brought much assistance to low earners. Social Security is the largest program, then the Earned Income Tax Credit. The full list is in the Supplemental Poverty Measure. Poverty is reduced by more than 40%. But this is "official" poverty, and the actual hardship and poverty is between 26% and 40%. The lower-earning 50 percent, however, cannot save, and the differences in savings' amounts between the groups is a Grand Canyon gap.  
The wealth ratio is 1 to  1,475.    Imagine 50 people 1 inch tall and one person 130 feet tall -- same ratio. 

Returning to income gaps, the post-tax gap between the lower fifty and the top one percent is reduced from 81 to 40.2.    
The pre-tax gap was 81. 
For every one dollar earned by the lowest 50:                                                                                                                                     
                                      The post-tax ratio in comparison:
                        Pre-tax      $1    Post-tax    $1
            the next 40 earned $4                  $2.7
     and the next 9 earned $12                   $6.7
 and the final 1% earned $81                 $40.2

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Wealth per adult - Ratios 

Total adults in U.S. 2019 =  245,140,000, page 169  
Total Wealth, U.S. =  $105.990 trillion, page 166
Wealth spread by deciles, page 168

Lower 50% owns 1.2% of wealth, or $1.27188 trillion. 
Divided among 122.5 million adults, that’s $10,383 per adult. 

Mid portion, percentiles 51 to 90, or 58,198,060 adults, owns 22.9% of wealth, or $24.27171 trillion
Divided by 58,198,060, that comes to $247,671 per adult.

The 91 to 99th percentile, 9%, or 22.05 million adults, owns 40.5% of wealth, or $42.92595 trillion.
Divided among 22.05 million adults, that’s $1,946,755 per adult. 

The top 1 percent, 2.45 million adults, owns 35.4% of wealth, or $37.52046 trillion.
Divided among 2.45 million adults, that is $15,314,473 per adult.

Per adult, the lower half each owns $10,383
The next forth percentile each owns $247,671.
The ninety-first to the ninety-ninth percentile each owns $1,946,755.
The top one percent each owns $15,314,473

The gap between the lower 50% and the top one percent is 1,475 ————  (15,314,473 / 10,383).

As a ratio: 
The lower 50 each has 1.
The next 40 each has 24.
The next 9 each has 188.

The top 1 each has 1,475.    
The gap between those in the lower 50% to those in the top 1% is 1,475. ONE TO 1,475 


Added information, October 13, 2019: 
The Social Security Administration released its annual wage income report this month. 
Median (or middle worker) wage income for over 167 million workers was $32,838. This is an increase since 2017 of  2.5% (adjusted for inflation). Not bad.

The average income per worker for the lower half was $14,320.
The collective income of this lower half of workers -- an income of $1.2 trillion for 88 plus million workers -- amounted to only 8.0% of the total national income (I added the lower total, $1,201 billion, and divided by the Joint Committee on Taxation total national income for 2018, $15,007 billion equals 8.0%). I ask myself if this is a fair wage. Wage income is very low in the U.S.A.

Really, you have to be willing to work your brain with simple arithmetic to follow my discussion in this part of the essay. How simple is 8%? for half of the workers? 

This year wage income was 56% of all income. This is not unusual; the State of Working America  shows for year 2011 that it was 54%. The sources of other income are indicated: capital gains, pensions, proprietors' income, cash transfers, in-kind income, and so on.  

As the lower half earned 8.0% in wages, the higher half earned about 48.0% (for a total of 56%), and other income earned 44%. (8 + 48 + 44 = 100, got it?)  Most of the "other income" was capital income that is destined for high earning households. Look at the State of Working America table to confirm. As my last essay at the former Economics Without Greed blogspot shows, 12.5% of all income goes to the lower-earning half of Households. 

The average annual worker income for the lower half is $14,320. (You have to divide the $1.2 trillion by the 83.8 million workers)  Minimum wage, $7.25 an hour for 2080 hours (one year) equals $15,080. The average for 88 million workers is $760 less, or 5% below, the yearly income of a full-time minimum wage worker. Half of the workers are earning less than a minimum wage worker who works full-time and year round. Think about it for a few seconds. What this means is that wage income is very low in the U.S.  --- $7.25 an hour? That's very low income, it is poverty. How do these workers evade the "poverty" designation? They are married to a higher earning worker. Together their household rises above official poverty. 

The BLS table says that the median weekly income for part-time workers in 2018 was $267 a week, or $13,884 a year. I believe this is wrong or incorrect. And another table says that 17.4% of workers are part-time. Therefore we must add 32.6% full-timers to the part-timers (17.4%) to make up the lower-earning 50%, half. Many full-timers, 32.6%, must be partial-year workers; otherwise they'd  be making below minimum wage, $15,080. A part-time worker earning $15 an hour and working half time, 1,040 hours a year, would earn $15,600 in a year. The BLS numbers or the SSA numbers seem to conflict. Perhaps the partial-year workers are not accurately included. I choose and believe the accuracy of the SSA numbers; it seems incredible that the SSA would inflate the number of W-2 forms received. The error lies, probably, because the BLS does not report number of hours worked per year, and it estimates by surveys, not by actual counts. The latter also results in an underestimate  of the true unemployment rate, which I think is almost 10%. See the njfac.org (monthly unemployment report) for additional arguments. And see economist Jack Rasmus discuss my analysis on his blog, here. It is too complex to burden this essay with the details, but nearly 10% of workers today are UNEMPLOYED, says I. 

Eighteen years ago, in 2000, the median worker, exactly in the middle, earned, adjusting for inflation, $30,631, or $2,207 lower than in 2018; in 18 years the median has increased by 7.2%, a pitiful 0.4% per year. A look at the per capita disposable income from 2000 to 2018, at Table 2.1 BEA.gov, shows that income for all increased by 32.4% (in "chained (2012) dollars"). The economy as a whole grew 4.5 times faster than the median wage income! This is the ongoing trend since 1973. Recall a study cited above, The New Gilded Age, (see pdf version, page 4) that  claims that 58.7% of all growth went to the top one percent.  

Recently I calculated that the average income for the lower-half of households was $27,960, and the average for the higher half was $187,111 (30 to 180 is a difference of 6 times). The differential is 6.7 times. The higher half average is 6.7 times that of the lower half. (See the table I used the data from the ITEP.org report "Who Pays Taxes in America? 2019" , see the last table). Imagine two workers;  one earns $1 and the second earns $6.70 -- that's how it goes today in the U.S.A. 

https://itep.org/wp-content/uploads/WPTIA-2019_table-2.png

It is depressing not just for lower-earning workers. It is depressing for everyone. I have friends who cannot afford dental care, and maybe you know someone who can't afford prescriptions, or can't afford rent, or child care, or a trip to their parents, or maybe a night at the restaurant. Forty percent of households cannot afford basic expenses says the ALICE  report from the United Way charity  -- think food, rent, utilities, car expenses, phone, medical, child care. Think about going without some of these things. Life starts to look grim, especially when this condition is continual over the years. Think about giving up your Internet connection and not being able to read this blog!
  

It doesn't have to be this way. The average wage income for all workers is just over $50,000 (SSA report 2018), and the average income per household is over $117,000 -- AVERAGE! I think that 28% of households are single person households. Take a look at this from the USCensus, here. It says 28%. (And divide the JCT total income of $15 trillion by 128 million households. It is an average of over $117,000). The average wealth for all 250 million adults is over $400,000, see here (Databook, 2018, page 152). Imagine a nation in which all adults had an average of between $200,000 and $600,000 in savings and NET worth -- that should be us. It isn't. As you can see by looking back at my former blog, last essay citing Edward N. Wolff, or at the Credit Suisse Databook (above), both agree, the lower 40% own ZERO percent of the national savings! And 40% cannot pay an emergency expense of $400 says the Federal Reserve report on household well-being.
  
I try not to clutter the main text of my essays with details that just make it harder to grasp the essentials, so I put this added stuff at the end. I hope it depresses you.

Next, in 24th Place: 
The United Nations produces yearly an Index of Human Development, and another index more accurately adjusted for inequality. In 2017 the U.S. scored 11th among all 189 nations before adjusting for inequality, and after it placed 24th, between Korea, Estonia, Poland, Slovakia and Isreal. (http://hdr.undp.org/en/composite/IHDI) Yet in income and GDP per capita, the U.S. ranks at the top among major nations.

The very last added comment: The graph at the top shows the movement of "average weekly earnings" for 80% of workers who are employees. Here's what I calculated: In 1973 we saw the peak wages for this 80% group, whose average yearly income (adjusting for inflation) was $47,143. It declined by 24% until 1991 and reached $35,701. These are the years of Ford, Carter, Reagan, and Bush 1. Then it picked up and now stands at $43,403, still 8% below the 1973 level. And how much has the "per capita disposable income" increased (found at BEA.gov, Table 2.1) since 1973?
Good question. In the past 46 years, per capita income increased by 122%, more than doubling. Income for 80% drops by 8%. Who says we are not the greatest?    Why not share this blog with a friend?  I would sleep better if you did.


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Addendum, September 9, 2019:
Steven Greenhouse, labor journalist and author of The Big Squeeze and the new book Beaten Down, Worked Up -- The Past, Present, and Future of American Labor, speaks for over an hour about his new book -- a video: see here. And Ralph Nader interviews S. Greenhouse on his Radio Hour, October 26, 2019. 
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 October 11, 2019 -- I recommend two articles: 1) By Sam Pizzigati at Inequality.org, "Have Researchers Just Hit an Inequality Trifecta?". Learn what a trifecta is, and learn that, "America’s 400 richest households paid taxes at a lower rate than any other income cohort in the nation, the first time that’s happened since the modern federal income tax went into effect in 1913." and that, "In 1950, Saez and Zucman point out, our top 400 households had a combined tax bill that averaged 70 percent of their incomes. A generation later, in 1980, that combined rate took 47 percent — about half — of top-400-household incomes. That rate has since fallen to last year’s 23 percent." 

Captured by the 1%? Take a look at the report from the Institute for Taxation and Economic Policy as they critique the Tax Cut and Jobs Act, the Trump/Republican tax cut. You might conclude that the 1%, who received 58.7% of economic growth since 1973, has captured the federal government and its tax system. And a second report here -- the top 1% receive average of $50,000 in tax cuts, the lower 20% receive $90.

And the other article, 2) By Clay Marsh "Facing Deaths of Despair from the Depths of Despair in  West Virginia". The first spotlights recent research and the second paints the outcome of lost opportunity resulting in lost lives. A HALF MILLION LIVES LOST IN 14 YEARS-- A quote from one reference in the article: " If the white mortality rate for ages 45−54 had held at their 1998 value, 96,000 deaths would have been avoided from 1999–2013, 7,000 in 2013 alone. If it had continued to decline at its previous (1979‒1998) rate, half a million deaths would have been avoided in the period 1999‒2013, comparable to lives lost in the US AIDS epidemic through mid-2015. Concurrent declines in self-reported health, mental health, and ability to work, increased reports of pain, and deteriorating measures of liver function all point to increasing midlife distress." 
And another study referenced in the article states, "A difficult childhood reduces life expectancy by 20 years among adults who experienced six or more particular types of abuse or household dysfunction as kids, while those who suffered fewer types of trauma lost fewer years of life, a large-scale epidemiological study finds." 
The conclusion states, "In other words, looking at life fearfully with a mindset of scarcity (my emphasis) physically ages people, diminishes their health, and makes them prone to drug addiction and other ills. 
Alternatively, if we look at our lives as full, abundant, and safe, we can reduce stress, improve our health, and maintain our vitality.
If we can address the epidemic of hopelessness and isolation in West Virginia and across the United States, we will also address our health crises."