Friday, August 22, 2008

Yes, Virginia, there is a difference.

To any 1) disgruntled, hysterical Hillary supporters, 2) blue-collar FoxNews watchers, 3) Michael Savage/Rush Limbaugh/Bill O'Reilly enthusiasts, here are the two presidential candidates' take on what constitutes being rich in America. The issue came up during celebrity pastor Rick Warren's Forum last week. He asked both men this question: "How do you define rich?”

Obama would define anyone making over $250,000 a year as being rich. McCain said how about $5 Million dollars a year? Now, of course, he says he was joking. The McCain household income was over $6 Million in 2006. Now, Obama is not exactly struggling; his household income was $4.2 million dollars.

How many Americans do you know who make $5 million dollars a year? Or even $250,000?

The median household income in America in 2006 was $48,201, meaning half of Americans make more that $48,201 and half make less than $48,201. It is the line dividing the distribution of per capita earnings in half. In America, income distribution is disproportionate. The Census Bureau reported for 2006 that white people had a medium household income of $52,423, while the medium income for blacks was much less at $31,969. Hispanics had a slightly higher household income than blacks at $37,781. Asian had a higher household income than all races at $64,238.

Now, by my definition, both John McCain and Barack Obama are rich men. The difference, I believe, is who they think aren't, and what their respective policies will mean for those at the extremes of income inequality in America.

No, we are not talking socialism. We are talking fairness. Do the math.

This graph is a plot of year against the corresponding top marginal income tax rate rate (blue). Where the top marginal rate on earned income differs (1971--1981), it is also plotted (in red).

Sources for graph:
[1] Robert A. Wilson and David E. Jordan, "Personal exemptions and individual income tax rates, 1913-2002" (Rev. 6-02), in Internal Revenue Service, Statistics of Income Bulletin (Publication 1136), Spring 2002, pp. 216-225
[2] "Table A.--U.S. individual income tax: personal exemptions and lowest and highest bracket tax rates, and tax base for regular tax, tax years 1913-2003" (Rev. 4-2003), in Internal Revenue Service, Statistics of Income Bulletin (Publication 1136), Winter 2002-2003

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