Part Two

​Key Takeaway: When we include all transfer payments, the poverty rate in America is 3%, not the reported 14%-16%.  So why do government agencies ignore transfer payments, and falsely report double digit rates for poverty?

As noted, the US economy is number one in redistribution of the national income to the lower 50% of earners compared to all other EU countries.   Once you add all the income transfers and social welfare spending, we lead the EU. The US is already on the path to socialism!

So how does the US do it?  As the chart notes, the US, due to indirect taxes and in-kind transfers of income, is more progressive than any EU country, ​which leads to a greater share of national income being distributed to lower income Quintiles versus the EU

Income Inequality and Poverty in America- Let's get the Facts

Factoids about Income, Transfer Payments, and Poverty in America

Source for the data noted on effect of transfer payments is The Myth of American Inequality ​by Dr. Phil Gramm

The Left in America constantly criticizes our economic system as irredeemable, incapable of fairness in income and cites as their gold standard the EU countries, especially socialist nations such as Norway, Sweden and Denmark as examples of how we could do better.  Their solution is tax, spend and redistribute income to make society more equal and fairer.   What are the facts?  Consider the chart:

​Part One

  • Since the 1960s, the BLS, Census Bureau and other agencies have reported that the poverty rate in the US is in the 12%-16% range, excluding the effect of income redistribution and transfer payments​
  • The average transfer payment to the bottom income quintile is $35,000
  • The bottom Quintile spent twice as much as their reported income, thanks to transfer payments
  • The bottom Quintile has spendable income on a par with the next two Quintiles above (see chart)
  • The top 20% Quintile makes 16.7 times the income of the bottom Quintile. But when you add in all transfer income, the ratio is four to one, not 16.7 to one
  • The Labor Force Participation Rate (LPR) of the bottom Quintile was 68% fifty years ago.  Today the LPR is 36%​

To read the full article source, click here 

For another insight, click here