The data shows the rise in median expenditures has outpaced before-tax income
for the lower 40 percent of earners in the five years to mid-2017 while the upper half has increased its financial cushion, deepening income disparities.
Reflecting higher cost of funds in the 1980s, before-tax income
to assets was lower in 1983 and 1987 than in 1959 or 2015.
In addition to market income, they include all public cash assistance and in-kind benefits from social insurance and government assistance programs to arrive at "before-tax income
." Their next step is to subtract all federal taxes including personal income taxes, Social Security payments, excise taxes and corporate income taxes.
One North Carolina server volunteered: "I made $60,000 in tips last year, reported $40,000--and had a before-tax income
The official CE definition of before-tax income
does not include lump-sum income, and the CE imputes only the components of before-tax income
In a recent December 2013 report, the Congressional Budget Office divided all US households into five groups of equal size (quintiles), on the basis of their before-tax income
. (3) The CBO definition of before-tax income
is composed of labor income, business income, capital gains, capita income (excluding capital gains), income received in retirement for past services and other sources of income.
Between 1996 and 2006, the average inflation-adjusted tax paid by taxpayers in the top 0.1% increased by 33% (from $1,398,857 to $1,860,790) while their average before-tax income
increased by 75% (from $4,275,339 to $7,512,538).
A family is poor if its before-tax income
is less than the threshold.
If we become obsessed with tax breaks for the rich and ignore everything else, the skewing of before-tax income
will become so large that even the most redistributive taxes will still leave gross inequities.
Nearly one in five Americans under age 65 lived in families that spent more than 10% of before-tax income
on insurance premiums and medical care in 2006 (the last year for which figures are available), up from one in seven Americans in 2001, the report says.
The think tank defines a high out-of-pocket burden for healthcare as spending more than 10% of before-tax income
on insurance premiums and medical care.
If the business could be sold for $400,000, and the funds invested at 8 percent, the resulting before-tax income
would be $32,000 per year, over three times that provided if the business were retained.