Piketty, Saez and Zucman (PSZ) are full of shit. The top 1%'s share of income after taxes and transfers hasn't budged much since the early 1960's.

Gerald Auten, who works for the Office of Tax Analysis at the Treasury Department, and David Splinter, with the Joint Committee on Taxation of the U.S. Congress, came out with a new paper recently. Here's the link

https://davidsplinter.com/AutenSplin...Inequality.pdf

And here's the Cliff Notes version, written by Tyler Cowen, a professor of economics at George Mason University,

https://www.bloomberg.com/opinion/ar...hink#xj4y7vzkg

Piketty, Saez and Zucman are three renowned Progressive French economists. Saez and Zucman came up with both Elizabeth Warren's and Bernie Sander's tax platforms back during the 2020 Democratic Party primaries.

They're the economists behind the claim that the top 1% have become fabulously wealthy while other Americans have lost ground, that's a staple in the "Political Demagoguery Toolkit" of many Democratic Party politicians.

Auten and Splinter have blown their research on income inequality out of the water, with better data and better arguments according to Cowen.

Real incomes after taxes and transfers have increased substantially since the 1960's for all income groups, not just the high income earners.

I haven't had a chance to read the paper yet, but am looking forward to it.

See Figure 6B on page 28 of the paper for a comparison of PSZ's and Auten-Splinter's estimates of after-tax national income for the top 1%. It was around 8% to 9% during the first half of the 1960's, and that's about where it was at the end of the chart, in 2020.

is this where midnite dude comes to the rescue?

Very interesting; thanks for posting this.

Although I have not read the Auten-Splinter paper, I saved the link and will probably take a glance at it over the holidays. I did read the Tyler Cowen piece when it appeared on Bloomberg a week or two ago, and think he gave a pretty good rundown.

By the way: If you're not familiar with it, I recommend Cowen's excellent blog site, to which he posts nearly every weekday.

https://marginalrevolution.com/

Piketty, Saez and Zucman are three renowned Progressive French economists. Saez and Zucman came up with both Elizabeth Warren's and Bernie Sander's tax platforms back during the 2020 Democratic Party primaries.

They're the economists behind the claim that the top 1% have become fabulously wealthy while other Americans have lost ground, that's a staple in the "Political Demagoguery Toolkit" of many Democratic Party politicians. Originally Posted by Tiny

Indeed!

Progressive politicians like Sanders and Warren often site the work of this trio of left-wing professors, claiming that they intellectually undergird arguments in favor of of extremely high tax rates. They're fond of pointing out how well the economy worked back in the days of 91% top tax brackets, for example. (Of course, hardly anyone paid more than a fraction of that rate, since it was so much easier for very high income and wealthy taxpayers to shelter most of their income prior to the 1986 tax reform. But why let pesky little facts get in the way when you have a political axe to grind?)

is this where midnite dude comes to the rescue? Originally Posted by dilbert firestorm

Please tell us more about this "midnite dude" to whom you are referring! Are you saying he undertakes rescue missions? Sounds like the sort of swashbuckling character you'd like to have on your side!

Please tell us more about this "midnite dude" to whom you are referring! Are you saying he undertakes rescue missions? Sounds like the sort of swashbuckling character you'd like to have on your side! Originally Posted by Texas Contrarian

I thought DF was referring to CaptainMidnight. Besides Lustylad he is the other genius on monetary policy. He is rather selective about which threads he comments on. I could be wrong. I don't know of any other ECCIE userid with a midnight in it that posts in the Political forum.

In this thread Lustylad refers to Captainmidnight.

https://www.eccie.net/newreply.php?d...y&p=1062904481

He was being sarcastic

Whatever the case for the 1% or even the 10%, I know I felt more economically confident in early 2019 than I have ever since. Took the Grand kids for a drive through lunch and it was ~$50. Later on we got frozen Yogurt, and it was $40 . . .and that was for two adults and two kids.

Throw in the movie in between and the total amounted to what we spent on Christmas for them a few years ago!

Sure, the rate of inflation has come down, but we are still stuck with the inflated prices that came after Biden took office.

Please tell us more about this "midnite dude" to whom you are referring! Are you saying he undertakes rescue missions? Sounds like the sort of swashbuckling character you'd like to have on your side! Originally Posted by Texas Contrarian

He was a tireless crusader for free markets, rational government, truth, justice and the American Way. He will be missed.

Lookee here, Tiny!

WSJ columnist James Freeman just cited the same Auten-Splinter study to skewer Fauxcahontas and her clueless, divisive, redistributionist demagoguery:

Speaking of Warren Whoppers

This seems like an appropriate moment to note the falsehood at the heart of the senator’s political identity. No, we’re not talking about the claims about her ancestry. For years her entire policy agenda has been built on a criticism of the U.S. economy that is simply false.

Chris Giles recently wrote in the Financial Times:

How would you feel if you found out that US income inequality had not risen over the past 60 years; the rich had not taken the lion’s share of economic growth since the 1980s; and the poorest half of US society had about the same share of total income in 2020 as they had in 1960?

I suspect many, like me, would feel pleasure tinged with scepticism. Happiness because it suggests the world’s most powerful economy was producing fairer outcomes and disbelief because the conjectures run counter to almost everything we have been told about US society.

These are not just hypothetical questions; the results lie at the centre of an analysis by Gerald Auten and David Splinter — officials, respectively, at the US Treasury’s Office of Tax Analysis and the US Congress Joint Committee on Taxation.

Their case keeps getting stronger. In 2014 your humble correspondent noted Gerald Auten’s work poking holes in the idea that there was no more income mobility in the U.S. As for his work with Mr. Splinter, in 2019 this column pointed out their research showing little change since 1960 in the income share received by the top 1% of U.S. earners.

Now in their September paper entitled, “Income Inequality in the United States: Using Tax Data to Measure Long-Term Trends” Mr. Auten and Mr. Splinter examine income over decades. They report that “increasing government transfers and tax progressivity have resulted in rising real incomes for all income groups and little change in after-tax top income shares.” They write:

Our estimates for after-tax income indicate that the top one percent share increased only 1.4 percentage points since 1979 and only 0.2 percentage points since 1962. These improved income measures also have implications for lower-income groups. Instead of real per capita incomes of the bottom half of the distribution appearing unchanged since 1979, we find that after taxes and transfers they increased by two-thirds.

If the senator was so wrong about this fundamental issue of economics, let’s not let her anywhere near our sandwiches.

https://www.wsj.com/articles/elizabe...dwich-44bbb663

I mean, isn't it obvious if you want to measure historical trends in income inequality, you should compare income AFTER TAXES, AFTER GOVERNMENT TRANSFERS, AND AFTER ALL WELFARE AND SUPPORT PROGRAMS?

Even that probably still exaggerates the degree of inequality, since the measurements start with U.S. Treasury income tax data - and many so-called "low-income" folks active in the underground (cash) economy fail to report all of their income.

[SNIP]

Please tell us more about this "midnite dude" to whom you are referring! Are you saying he undertakes rescue missions? Sounds like the sort of swashbuckling character you'd like to have on your side! Originally Posted by Texas Contrarian

was referring to your former midnight something alias. couldn't remember your current alias.

you do have a habit of supporting your BFF on economic topics.

I mean, isn't it obvious if you want to measure historical trends in income inequality, you should compare income AFTER TAXES, AFTER GOVERNMENT TRANSFERS, AND AFTER ALL WELFARE AND SUPPORT PROGRAMS? Originally Posted by lustylad

No shit Sherlock.

Even that probably still exaggerates the degree of inequality, since the measurements start with U.S. Treasury income tax data - and many so-called "low-income" folks active in the underground (cash) economy fail to report all of their income. Originally Posted by lustylad

That should be obvious too IMHO. People with large amounts of unreported income likely will show up as having relatively low income in the statistics. How many high dollar hotties and drug dealers report six figure taxable income on their tax returns?

Here's an excerpt from the Economist. Please note the text in bold below, similar to what Texas Contrarian has shouted from the rooftops.

According to a familiar saying, academic disputes are so vicious precisely because the stakes are so low. But in a scholarly battle over inequality, the stakes are rather higher. Research by a trio of French economists—Thomas Piketty, Emmanuel Saez and Gabriel Zucman—has popularised the notion that American income inequality is soaring. Other economists have built heaps of research upon these findings, while politicians have pledged to undo the trends through higher taxes and spending. To most people the phrase “inequality is rising” seems self-evidently true.

Others have cast doubt on the trio’s findings, however—notably Gerald Auten of the Treasury Department and David Splinter of the Joint Committee on Taxation, a nonpartisan group in Congress. We first analysed their work in 2019, as part of a cover story. It modifies the French trio’s methodology and comes to a very different conclusion: American post-tax income inequality has hardly risen at all since the 1960s. In the past few days the Journal of Political Economy (jpe), one of the discipline’s most prestigious outlets, has accepted their paper for publication.

This has not settled the debate. In fact, the opposing sides are digging in. “I don’t think that inequality denial (after climate denial) is a very promising road to follow,” Mr Piketty tells your columnist. “We’ve been showered with prizes from the establishment for our academic contributions on this very topic,” adds Mr Saez. Others say the jpe paper has won the day. “It seems clearly correct to me,” says Tyler Cowen of George Mason University. “The Piketty and Saez work is careless and politically motivated,” says James Heckman, a Nobel prizewinner at the University of Chicago.

Messrs Auten and Splinter focus much of their attention on the distorting impact of an important tax reform in 1986. Before it was introduced many rich people used tax shelters that allowed them to report less income on their tax return and therefore pay less to the irs. In “Mad Men”, a television series about advertising executives in the 1960s, Don Draper and his pals fund their lavish lifestyles by putting lots of spending on expenses. Reforms made such wheezes harder, and increased incentives to report income, in part by lowering rates. Looking only at his tax return, Draper might appear to have got richer after 1986, even as his true income stayed the same. Once this is corrected for, the rise in top incomes is less dramatic than it might at first appear. In some papers one-third of the long-term rise in inequality occurs around 1986.

Messrs Auten and Splinter make other adjustments. Messrs Piketty and Saez have focused on “tax units”, typically households who file taxes in a single return. This introduces bias. In recent decades marriage has declined among poorer Americans. As a consequence, the share of income enjoyed by those at the top appears to have risen, as the incomes of poorer people are spread across more households, even as those of richer households remain pooled. Messrs Auten and Splinter therefore rank individuals.

They also account for benefits provided by employers, including health insurance, which reduces the share of the top 1% in 2019 by about a percentage point. They make different assumptions about the allocation of government spending, and about misreported income. All in all, they find that after tax, the top 1% command about 9% of national income, compared with the 15% or so reported by Messrs Piketty, Saez and Zucman. Whereas the trio conclude that the share of the top 1% has sharply increased since the 1960s, Messrs Auten and Splinter find practically no change.

Their paper is a valuable contribution. Greg Kaplan of the University of Chicago, who edited it, notes that it was reviewed by four expert referees and went through two rounds of revisions that he oversaw. The paper is scholarly in the extreme (including delights such as “the deduction for loss carryovers is limited to 80% of taxable income computed without regard to the loss carryover”). The authors are clearly obsessive about the history of the tax code.

https://www.economist.com/finance-an...bly-arent-they



It sounds like maybe we should add Piketty, Saez and Zucman to your list of polemical economists. Admittedly they're not as controversial as Krugman, but they're more pernicious.

“The Piketty and Saez work is careless and politically motivated,” says James Heckman, a Nobel prizewinner at the University of Chicago.

No shit Sherlock.



That should be obvious too IMHO. People with large amounts of unreported income likely will show up as having relatively low income in the statistics. How many high dollar hotties and drug dealers report six figure taxable income on their tax returns?

Here's an excerpt from the Economist. Please note the text in bold below, similar to what Texas Contrarian has shouted from the rooftops.

According to a familiar saying, academic disputes are so vicious precisely because the stakes are so low. But in a scholarly battle over inequality, the stakes are rather higher. Research by a trio of French economists—Thomas Piketty, Emmanuel Saez and Gabriel Zucman—has popularised the notion that American income inequality is soaring. Other economists have built heaps of research upon these findings, while politicians have pledged to undo the trends through higher taxes and spending. To most people the phrase “inequality is rising” seems self-evidently true.

Others have cast doubt on the trio’s findings, however—notably Gerald Auten of the Treasury Department and David Splinter of the Joint Committee on Taxation, a nonpartisan group in Congress. We first analysed their work in 2019, as part of a cover story. It modifies the French trio’s methodology and comes to a very different conclusion: American post-tax income inequality has hardly risen at all since the 1960s. In the past few days the Journal of Political Economy (jpe), one of the discipline’s most prestigious outlets, has accepted their paper for publication.

This has not settled the debate. In fact, the opposing sides are digging in. “I don’t think that inequality denial (after climate denial) is a very promising road to follow,” Mr Piketty tells your columnist. “We’ve been showered with prizes from the establishment for our academic contributions on this very topic,” adds Mr Saez. Others say the jpe paper has won the day. “It seems clearly correct to me,” says Tyler Cowen of George Mason University. “The Piketty and Saez work is careless and politically motivated,” says James Heckman, a Nobel prizewinner at the University of Chicago.

Messrs Auten and Splinter focus much of their attention on the distorting impact of an important tax reform in 1986. Before it was introduced many rich people used tax shelters that allowed them to report less income on their tax return and therefore pay less to the irs. In “Mad Men”, a television series about advertising executives in the 1960s, Don Draper and his pals fund their lavish lifestyles by putting lots of spending on expenses. Reforms made such wheezes harder, and increased incentives to report income, in part by lowering rates. Looking only at his tax return, Draper might appear to have got richer after 1986, even as his true income stayed the same. Once this is corrected for, the rise in top incomes is less dramatic than it might at first appear. In some papers one-third of the long-term rise in inequality occurs around 1986.

Messrs Auten and Splinter make other adjustments. Messrs Piketty and Saez have focused on “tax units”, typically households who file taxes in a single return. This introduces bias. In recent decades marriage has declined among poorer Americans. As a consequence, the share of income enjoyed by those at the top appears to have risen, as the incomes of poorer people are spread across more households, even as those of richer households remain pooled. Messrs Auten and Splinter therefore rank individuals.

They also account for benefits provided by employers, including health insurance, which reduces the share of the top 1% in 2019 by about a percentage point. They make different assumptions about the allocation of government spending, and about misreported income. All in all, they find that after tax, the top 1% command about 9% of national income, compared with the 15% or so reported by Messrs Piketty, Saez and Zucman. Whereas the trio conclude that the share of the top 1% has sharply increased since the 1960s, Messrs Auten and Splinter find practically no change.

Their paper is a valuable contribution. Greg Kaplan of the University of Chicago, who edited it, notes that it was reviewed by four expert referees and went through two rounds of revisions that he oversaw. The paper is scholarly in the extreme (including delights such as “the deduction for loss carryovers is limited to 80% of taxable income computed without regard to the loss carryover”). The authors are clearly obsessive about the history of the tax code.

https://www.economist.com/finance-an...bly-arent-they



It sounds like maybe we should add Piketty, Saez and Zucman to your list of polemical economists. Admittedly they're not as controversial as Krugman, but they're more pernicious.

“The Piketty and Saez work is careless and politically motivated,” says James Heckman, a Nobel prizewinner at the University of Chicago. Originally Posted by Tiny

pernicious like karl marx?

Tiny - In case you didn't see this...

Phil Graham and John Early have a new book out titled "The Myth of American Inequality".


Another Wrong Way to Measure Poverty

The real rate is 2.5%, but the Census Bureau inflates it by excluding most social-welfare benefits.

By Phil Gramm and John Early
Dec. 5, 2023 6:33 pm ET


The credibility of the Census Bureau’s official measure of poverty didn’t survive the pandemic. Though government payments for social benefits rose by $1.5 trillion, or 47%, between 2019 and 2021, they didn’t dent the official poverty rate. The rate rose to 11.6% from 10.5%. President Biden claimed that the pandemic increase in the refundable child tax credit would cut child poverty in half, but the subsequent official census rate rose from 14.4% to 15.3%. These results were predictable because the official poverty measure fails to count 88 social benefits that low-income Americans receive from the government as part of their income, including almost all of the pandemic benefits.

With the official poverty measure discredited, the Biden administration is pushing the experimental Supplemental Poverty Measure, which counts about half of the social benefit payments as income but redefines the income thresholds that determine who is counted as poor in a way that ensures the poverty threshold rises as median income rises. The official poverty measure has hardly changed for more than 50 years, even as social benefit payments to the average household in the bottom 20% of income earners have risen from $9,700 to $45,000 in inflation-adjusted dollars, because most of these payments simply aren’t counted as income to the recipients.

To address the public incredulity and embarrassment arising from its preposterous official measure of poverty, the Census Bureau began highlighting the Supplemental Poverty Measure by publishing it in the same press release along with the official measure. This newer measure, which counts refundable tax credits and other pandemic benefits as income, produced a poverty rate that declined from 11.7% in 2019 to 7.8% in 2021 and the politically desired effect of reducing child poverty from 12.6% to 5.2% over that period.

The fatal flaw of the official poverty measure is that it doesn’t count most government subsidies, such as Treasury checks beneficiaries receive from refundable tax credits, debit cards loaded with food-stamp allowances, and Medicaid payments as income to the recipients. When all benefits are counted, the percentage of Americans living in poverty falls to only 2.5%. Bruce Meyer of the University of Chicago and James Sullivan of the University of Notre Dame arrived at a similar figure by comparing the actual goods and services consumed by poor households in 1980 with the actual level of consumption of households that were being counted as poor in 2017. They found that only 2.8% of households in 2017 were consuming at or below the actual poverty consumption level. These findings also comport with the Census American Housing Survey, which has found that 42% of poor households own homes with an average of three bedrooms, 1½ bathrooms, a garage and a porch or patio. The average poor American family lives in a home larger than the average home of middle-income families in France, Germany and the U.K., and 80% of poor American households have air conditioning.

Although the Supplemental Poverty Measure counts more government benefits as income than the official measure, it defines poverty in relative terms so that it rises as median income rises. The Census Bureau defines the official poverty measure as “the inability to satisfy minimum needs.” By that definition, “the poor are those whose resources—their income from all sources, together with their asset holdings—are inadequate.” The thresholds used in the official measure are the cost of a defined quantity of goods and services required by a specific size and type of family to satisfy its minimum needs. The thresholds have been adjusted for inflation, increasing in current dollars by 776% since 1967, but the definition hasn’t changed.

The Supplemental Poverty Measure defines the poverty threshold in relative terms as the amount of income necessary to purchase 83% of the median family’s consumption of food, apparel, shelter and utilities plus an additional 20% of that total for other smaller necessities. Under this relative definition, no matter how much the median household spends on food, apparel and other necessities and no matter how luxurious those items might be, members of families that don’t have enough income to pay for that percentage of median household consumption will always be counted as poor, no matter how well off they are.

Since its inception in 1999, the supplemental poverty thresholds have risen by 42% more than the official poverty thresholds and about the same amount as median income simply because median households have bought more and higher-quality items in categories defined by the Census Bureau as necessities. Adopting the Supplemental Poverty Measure as the official measure would assure that economic growth that raises the level of income and consumption across the entire economy wouldn’t significantly reduce the poverty rate. It would decline significantly only with additional income redistribution. The American Enterprise Institute’s Kevin Corinth has shown that adopting the supplemental measure as the qualification standard for welfare payments alone would add more than three million households to the welfare rolls and increase federal welfare payments by more than $124 billion over the next 10 years.

When will Congress end this charade and demand that the Census Bureau give the nation an accurate measure of poverty? At what point does bureaucratic and political bias become fraud when it raises government spending by hundreds of billions of dollars and causes millions to leave the workforce?

Mr. Gramm is a former chairman of the Senate Banking Committee and a nonresident senior fellow at the American Enterprise Institute. Mr. Early served twice as assistant commissioner at the Bureau of Labor Statistics and is an adjunct scholar to the Cato Institute. They are co-authors with Robert Ekelund of “The Myth of American Inequality.”

https://www.wsj.com/articles/another...biden-fd9018b1

‘The Myth of American Inequality’ Review: Believe Your Eyes, Not the Statistics

Official government measures greatly exaggerate income inequality by ignoring taxation and noncash sources of income.

By Charles W. Calomiris
Dec. 26, 2022 5:54 pm ET


According to Mark Twain, “It ain’t what you don’t know that gets you into trouble. It’s what you know that ain’t so.” “The Myth of American Inequality,” by Phil Gramm, Robert Ekelund and John Early, quotes that wisdom, then offers 250 pages of analysis proving it.

Before reading the book, you should ask a few questions to test the authors’ hypothesis that misleading government statistics have led many Americans to misperceive the prevalence of poverty, the degree of inequality, and the changes in these measures in recent decades. Has the average standard of living grown substantially since the 1960s? Has inequality shrunk over that period? Did post-1960 redistributive policies reduce the percentage of families living in poverty?

Media commentators and politicians seem to believe that little progress has been made in raising average American living standards since the 1960s; that poverty has not been substantially reduced over the period; that the median household’s standard of living has not increased in recent years and inequality is currently high and rising (“a truth universally acknowledged,” according to the Economist magazine in 2020).

The authors—a former chairman of the Senate banking committee, a professor of economics at Auburn University and a former economist at the Bureau for Labor Statistics—show that these beliefs are false. Average living standards have improved dramatically. Real income of the bottom quintile, the authors write, grew more than 681% from 1967 to 2017. The percentage of people living in poverty fell from 32% in 1947 to 15% in 1967 to only 1.1% in 2017. Opportunities created by economic growth, and government-sponsored social programs funded by that growth, produced broadly shared prosperity: 94% of households in 2017 would have been at least as well off as the top quintile in 1967. Bottom-quintile households enjoy the same living standards as middle-quintile households, and on a per capita basis the bottom quintile has a 3% higher income. Top-quintile households receive income equal to roughly four times the bottom (and only 2.2 times the lowest on a per capita basis), not the 16.7 proportion popularly reported.

What explains the disconnect between reality and belief? Government statistical reports exclude “noncash” sources of income, which excludes most transfers from social programs. Taxes (paid disproportionately by high earners) are also ignored in official calculations. Furthermore, even the government’s “cash” income numbers are reported in a way that understates improvements in real (inflation-adjusted) income over time because government inflation measures fail to use the appropriate chained price indexes or take account of new products and services.

Increased earned-income inequality is the natural consequence of redistributive policies: if one can enjoy median household consumption without earning any income, the incentive to work is substantially diminished. This largely explains the growing distance between earned and total income for poor households (transfers to those households have gone up dramatically). Ironically, it is the very success of redistribution in reducing poverty and inequality that has led mismeasurement to create the false perception of increasing inequality.

The equality of consumption between the bottom quintile (in which only 36% of prime-age persons work) and the middle quintile (in which 92% of prime-age persons work) is a striking finding. As the authors note: “It is hard to see how a middle-income family with two adults both working would not resent the fact that other prime work-age people who are not working at all are just about as well off as they are.”

Most of the facts documented in this book will not shock economists who specialize in studying poverty and inequality. The formal studies of these topics published in professional journals, however, tend to focus on short periods of time and narrowly defined questions, not broad issues of measurement. What makes this book an invaluable new resource for public policy and economic education is its focus on how the experiences of Americans of different living standards evolved over time and how earned income and consumption diverged for the poorest households. It traces improvements in the living standards of the poor to transfer programs, shows how taxation of the rich has flattened the distribution of consumption across households, and documents how measurement errors have distorted general beliefs about economic inequality.

But that’s not all. This book is written in straightforward American English, not in economic think-tank jargon. It shows clearly how each element of the analysis (taxation, transfers, inflation adjustment) contributes to its conclusions. Graphs and tables are comprehensive and comprehensible. The style is lively and lucid. On two occasions I read passages aloud to my wife, who then raised questions that were addressed by the authors in the next few paragraphs.

The analysis probes deeply to demonstrate the robustness of its conclusions. For example, it measures not only differences in consumption by households across quintiles, but also the more meaningful per capita consumption across quintiles, and adjusts those per capita calculations to capture consumption synergies within households using standard methods.

Most important, the authors don’t clutter their analysis with contentious approaches to measurement, and they limit their policy recommendations to those that flow self-evidently from the facts they document. It is encouraging that three disparate economists can together write an objective book about the measurement of living standards, poverty and inequality without engaging in partisan advocacy that undermines their findings. (“While we each have our opinions and political views,” writes Mr. Gramm in a preface, “we share a desire to get the facts straight.”)

“The Myth of American Inequality” will have a positive effect on the quality of policy discussions, and may well achieve its objective of changing the ways in which government agencies report information about American household income and consumption. At a time when partisan tribalism makes serious discussion almost impossible in Washington, this book shows that economics is still a powerful tool kit for informing and disciplining our thinking across the partisan divide.

Mr. Calomiris is Henry Kaufman Professor of Financial Institutions at Columbia University.

https://www.wsj.com/articles/the-myt...cs-11672095284

Tiny - In case you didn't see this...

Phil Graham and John Early have a new book out titled "The Myth of American Inequality". The official poverty measure has hardly changed for more than 50 years, even as social benefit payments to the average household in the bottom 20% of income earners have risen from $9,700 to $45,000 in inflation-adjusted dollars, because most of these payments simply aren’t counted as income to the recipients.

....The fatal flaw of the official poverty measure is that it doesn’t count most government subsidies, such as Treasury checks beneficiaries receive from refundable tax credits, debit cards loaded with food-stamp allowances, and Medicaid payments as income to the recipients. When all benefits are counted, the percentage of Americans living in poverty falls to only 2.5%. Bruce Meyer of the University of Chicago and James Sullivan of the University of Notre Dame arrived at a similar figure by comparing the actual goods and services consumed by poor households in 1980 with the actual level of consumption of households that were being counted as poor in 2017. They found that only 2.8% of households in 2017 were consuming at or below the actual poverty consumption level. These findings also comport with the Census American Housing Survey, which has found that 42% of poor households own homes with an average of three bedrooms, 1½ bathrooms, a garage and a porch or patio. The average poor American family lives in a home larger than the average home of middle-income families in France, Germany and the U.K., and 80% of poor American households have air conditioning.
Originally Posted by lustylad

I did miss that one, thanks LustyLad. So, the poverty rate is defined such that if the median income rises, the threshold for poverty rises along with it. Even though the bottom 20% of households receive $45,000 a year in benefits. And even though the typical American poor family is better off by many measures than the average French, German or British family.