The Ramblings of the Millahtime Man

Wednesday, May 26, 2004

What really does your average joe earn in the US?

I keep hearing politicians talking about taxes and tax cuts to the different income brackets. The one thing I never hear is what defines someone as upper, middle and lower income brackets. As a matter of opinion I was curious because this could sway my vote for the next president. I wanted to know who was looking out for me and my money.

So, I did some research on the numbers.....

The published number by the US Census Bureau for the median household income for 2002 (the most recent published year) was $42,409. The mean (average) income for 2002 was $57,852.

We have to look at both of these numbers to see what this really means. Let's start with a couple definitions from the Census Bureau.

Mean (Average) income.
Mean (average) income is the amount obtained by dividing the total aggregate income of a group by the number of units in that group. The means for households, families, and unrelated individuals are based on all households, families, and unrelated individuals, respectively. The means (averages) for people are based on people 15 years old and over with income.

Median income.
Median income is the amount which divides the income distribution into two equal groups, half having incomes above the median, half having incomes below the median. The medians for households, families, and unrelated individuals are based on all households, families, and unrelated individuals, respectively. The medians for people are based on people 15 years old and over with income.

The mean (average) income can be misleading. We take all the income for everyone in the US and divide it by the total number of people. This includes the incomes of people like Bill Gate, Donald Trump and others that skew the mean income.

The number to really look at is the median income. That is what the guy smack dab in the middle would make. So, your average joe 6 pack would make about $42,000 US dollars per year.

If you are interested in looking at the numbers yourself you can check them out yourself at the US Census Bureau here.

Lets look at the tax brackets. There are several brackets depending on what you earn. I could not find them for 2002 but the 2003 brackets (coutrsey of Fairmark Press) are....

$0 to $7,000 is 10%
$7,000 to 28,400 is 15%
$28,400 to 68,800 is 25%
$68,800 to 143,500 is 28%
$143,500 to 311,950 is 33%
$311,950 and up is 35%

Now this is where opinion comes into play on the upper, middle and lower income brackets. They say lower but what bracket do they mean? There are more than 3 of them. The mean and median incomes both fall in the 25% tax bracket. So, I would assume this to be "middle class" and at least the middle tax bracket. So, would that make the 10% and 15% brackets to be the lower income bracket. That is $28,400 per year and under. So, when they talk about the lower tax bracket I would assume this is what they mean. I would also take from this that the "upper middle class" is the 28% bracket and the 33% and 35% bracket are the "upper class" or upper bracket.

Now I know where I fit and how these tax incentives, cuts, and hikes apply to me. Hope you do too.

12 Comments:

  • Don't forget that those income tax brackets are for "taxable income". This means that they are for your income after exemptions and deductions. For example, if the average joe has a wife, 3 kids and a $100,000 mortgage, he probably has $20,000 in exemptions and deductions. So you would need to add that to the those ranges in order to get a better idea of what income level is paying those rates in taxes.

    By Blogger Phil, at 12:43 PM  

  • Good post, but there's an error. You take the averages for households, families, and unrelated individuals and compare those against the income tax brackets for singles. The bracket limits for married filing jointly are approximately double those for singles.

    By Blogger Shajenko, at 2:52 AM  

  • Check out the definitive work on the american class/caste system:

    Paul Fussel, Class: A Guide through the American Status System (Simon & Schuster, November 1983);

    It isn't how much money you make that determines your class. You have to consider things like 1) how you make it (inherit, mental labor, physical labor) 2) the level of physical risk, 3) the amount of supervision, 4) the ratio of earned income to inherited income 5) the level of education, 5) what you wear (polyester or natural fibers), 6) your grammer and vocabulary, and 7) superstition.
    A typical high-prole plumber with his own business often makes considerably more money than a middle class office worker but with the physical labor, lack of education, poor grammer, polyester clothing, and superstition still distinguish him from higher classes. The 9 castes (and an example of the
    typical professions to give you a little bit of
    an idea wher they fit even though there is a lot
    more than profession to consider):

    top out of sight lives off of inheritance
    upper lives off of inheritance, CEO
    upper middle doctor, lawyer, professor
    middle office drone
    high prole highly skilled craftsman
    mid prole carpenter
    low prole unskilled laborer
    destitute homeless
    bottom out of sight institutionalized

    And then there are Category X folks (mostly intelligent and creative folk) who have tanscended
    the class system.

    By Anonymous Anonymous, at 12:24 PM  

  • Just wondering about the numbers you have for percentages of people in certain income brackets. How come the percentages add up to 146%?

    By Blogger Kevin Flannery, at 11:31 AM  

  • nevermind that last comment - misread things. sorry

    By Blogger Kevin Flannery, at 11:37 AM  

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