AMERICAN SHOPPERS

(Letter to Consumer Reports, 10/14/14:)

Your November article about the recovery of American shopping seems to focus on the presumed fellows of your magazine workers, most of whom are probably college-educated, white-collar, (sub-)urban, and not retail-employed.  So, I would hazard the guess that most of your focus is on a group well above the current median gross household income of slightly over $50,000 a year.

In the world near me, most folks are blue-collar, poorly employed or unemployed, high-school or trade-school-educated at most, and most have worked for small local businesses that used to employ most of Americans and who have been kicked in the teeth during the past 7 years or so.  Most households around here are near or well under that current median.

Why don't you write about the REAL American consumers whom I see all around me who have no spare change to spend, who have had to surrender their homes and have moved in with relatives or into rentals, who must choose between buying food or paying rents or UNINSURED medical bills?  You interviewed singles or mostly homes with two incomes, one of which is around $150K, and they are worried about curtailing their spending habits or where to go on vacation?  Give me a break!  I know maybe two people with household incomes over $100K!  The rest are well under $75K, like about 64% of ALL AMERICAN HOUSEHOLDS!  And, that's gross income, not taxable income.

The real "middle class" in this country is a lot worse off than you and Barack Obama and the rest of your effete white-collar brethren in the eastern Urban Corridor think!  I believe that unless and until there is a permanent abandonment of the pathetic fraud of "supply-side" and acceptance that ALL markets are demand-driven, then it will be Business As Usual with more stupid tax cuts for the well-to-do "middle class" and a royal screwing instead for the working classes, with higher payroll taxes on GROSS wage incomes, fewer income-tax deductions and tighter benefits in the name of "austerity"!

Sheesh!

SUPPLY-SIDE STUPIDITY

(The following is from an e-mail to wealthy skeptical acquaintances:)

Per recent research:

The FICA payroll tax is 6.2% direct and another 6.2% nominally paid by the employer (total 12.4%) ON TOP OF income taxes and levied on first dollars (unlike income taxes), no exemptions or exclusions.  I say "nominally" because it is really a pass-through cost for employers since all employers are thus taxed, so it tends to suppress wages and employment.  I believe it is payroll workers who suffer the brunt of all of it, even the portion "nominally" paid by employers.  And, as you know, self-employed people must pay 12.4% on the whole!  The FICA tax is paid ONLY on the first $110K of EARNED income and not on PASSIVE income like dividends, interest or cap-gains.  Therefore, it DISPROPORTIONATELY falls on workers mostly and not on wealthier folks, since 100% of the workers' GROSS incomes are thus taxed on top of whatever taxes on net TAXABLE income they must also pay.

True, SS benefits are proportionately capped because the FICA tax is not assessed on higher earned incomes, but the bulk of the personal cashflow in this country is not subject to the FICA tax.  According to the Kaiser Family Foundation, median US GROSS household income for 2011 was $50,443 (I suspect it's even lower this year), so that means that HALF of all households are grossing less than that number, and I daresay that at least 64% of all households were under $75K.  A bit over 77% were probably under $100K.  (See the last table for 2010.)

The reason the income tax rates need to be adjusted higher is not to "punish" wealthier folks but to avoid falsely using Social Security issues as red herrings to balance the Federal budget by delaying eligibility and/or increasing the FICA bite, wherein SS payouts are misrepresented as contributing to the Federal deficit, which is NOT TRUE.  FICA revenues currently cover the SS payouts.  And, lower-income folks spend about 100% of their net incomes (no savings) into mostly local economies, whereas wealthier folks do not.  As I have been saying, I believe it is the lack of SPENDING that is hurting our economy, NOT the lack of capital investment.  There is simply no such thing as a "supply-side" market.  All markets are DEMAND-driven.  If there is no demand, there is no market!  With us Boomers reducing our spending, SOMETHING must take its place in order for there to be economic "recovery."

We are suffering a SPENDING crisis, not a capital-investment crisis, yet most of the "experts" and politicians are still jabbering about cutting higher-bracket taxes (despite the humongous Federal deficit that disproportionately hurts lower incomes) to "stimulate" more capital investment!  That is utter nonsense!  That is a "solution" in search of a problem!

Below are shown the brackets for INCOME-tax rates.  The 39.6% bracket does not kick in until $406,751 TAXABLE (not gross) single income.  It is now above $450K for "middle-class" joint marrieds, thanks to Barack Obama.  The lower brackets are the brackets that were created for the so-called "Bush" tax cuts in 2001.  So folks with taxable incomes at the highest levels STILL get to keep over 50% of their gross dollars, even allowing for state and local taxes.  And, most of those folks are taking not one but two mortgage-interest deductions, including on yachts and beach cottages deemed "2d homes."  Working stiffs don't even get to deduct the RENTS they pay for basic housing, so that throws them into the rather stingy Standard Deduction. 

Landlords should think of the boom in rental housing construction (terrible shortages in central Virginia) that would likely be created if folks could deduct their apartment rents from gross income!

Per www.bankrate.com:

2014 Tax Brackets (for taxes due April 15, 2015)
Tax rate	Single filers	Married filing jointly or qualifying widow/widower	Married filing separately	Head of household
10%	Up to $9,075	Up to $18,150	Up to $9,075	Up to $12,950
15%	$9,076 to $36,900	$18,151 to $73,800	$9,076 to $36,900	$12,951 to $49,400
25%	$36,901 to $89,350	$73,801 to $148,850	$36,901 to $74,425	$49,401 to $127,550
28%	$89,351 to $186,350	$148,851 to $226,850	$74,426 to $113,425	$127,551 to $206,600
33%	$186,351 to $405,100	$226,851 to $405,100	$113,426 to $202,550	$206,601 to $405,100
35%	$405,101 to $406,750	$405,101 to $457,600	$202,551 to $228,800	$405,101 to $432,200
39.6%	$406,751 or more	$457,601 or more	$228,801 or more	$432,201 or more

Read more: http://www.bankrate.com/finance/taxes/tax-brackets.aspx#ixzz3G43dhG5i 

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<350px-personal_household_income_u .png="">

This graph shows the percentage of persons and households in each of the income groups shown.^{[citation needed]}

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The percent of households with six figure incomes and individuals with incomes in the top 10%, exceeding $77,500.^{[citation needed]}

Per Wikipedia, here are the distributions of household income per bracket for 2010.  The first graph to the right is the most telling--only 28% of ALL households grossed over $75K

that year, and only 17% were over $100K.

The chart below shows that in 2010 there were 121 Million households in the data group, and the median was somewhere between $50K and $54K.  64% were at or below $75K:

Income range	Households (thousands)	Percent	Percentile	Mean number of earners	Mean house- hold size
Under $5,000	4,261	3.52%		0.23	2.02
$5,000 to $9,999	4,972	4.11%	3.52%	0.36	1.81
$10,000 to $14,999	7,127	5.89%	7.63%	0.42	1.74
$15,000 to $19,999	6,882	5.68%	13.51%	0.57	1.96
$20,000 to $24,999	7,095	5.86%	19.19%	0.75	2.14
$25,000 to $29,999	6,591	5.44%	25.05%	0.85	2.22
$30,000 to $34,999	6,667	5.51%	30.50%	0.97	2.34
$35,000 to $39,999	6,136	5.07%	36.00%	1.06	2.41
$40,000 to $44,999	5,795	4.79%	41.07%	1.20	2.46
$45,000 to $49,999	4,945	4.08%	45.86%	1.32	2.55
$50,000 to $54,999	5,170	4.27%	49.94%	1.32	2.52
$55,000 to $59,999	4,250	3.51%	54.21%	1.49	2.72
$60,000 to $64,999	4,432	3.66%	57.72%	1.49	2.66
$65,000 to $69,999	3,836	3.17%	61.38%	1.58	2.75
$70,000 to $74,999	3,606	2.98%	64.55%	1.63	2.82
$75,000 to $79,999	3,452	2.85%	67.53%	1.70	2.89
$80,000 to $84,999	3,036	2.51%	70.38%	1.73	2.86
$85,000 to $89,999	2,566	2.12%	72.89%	1.80	3.00
$90,000 to $94,999	2,594	2.14%	75.00%	1.79	2.96
$95,000 to $99,999	2,251	1.86%	77.15%	1.87	3.09
$100,000 to $104,999	2,527	2.09%	79.01%	1.78	2.94
$105,000 to $109,999	1,771	1.46%	81.09%	2.01	3.18
$110,000 to $114,999	1,723	1.42%	82.56%	1.96	3.11
$115,000 to $119,999	1,569	1.30%	83.98%	1.98	3.06
$120,000 to $124,999	1,540	1.27%	85.27%	2.01	3.16
$125,000 to $129,999	1,258	1.04%	86.55%	1.97	3.08
$130,000 to $134,999	1,211	1.00%	87.59%	2.00	3.17
$135,000 to $139,999	918	0.76%	88.59%	2.10	3.18
$140,000 to $144,999	1,031	0.85%	89.34%	2.12	3.26
$145,000 to $149,999	893	0.74%	90.20%	2.11	3.21
$150,000 to $154,999	1,166	0.96%	90.93%	1.86	3.09
$155,000 to $159,999	740	0.61%	91.90%	2.04	3.11
$160,000 to $164,999	697	0.58%	92.51%	2.05	3.29
$165,000 to $169,999	610	0.50%	93.08%	2.15	3.17
$170,000 to $174,999	617	0.51%	93.59%	1.99	3.05
$175,000 to $179,999	530	0.44%	94.10%	2.09	3.08
$180,000 to $184,999	460	0.38%	94.53%	2.12	3.28
$185,000 to $189,999	363	0.30%	94.91%	2.30	3.32
$190,000 to $194,999	380	0.31%	95.21%	2.22	3.17
$195,000 to $199,999	312	0.26%	95.53%	2.30	3.28
$200,000 to $249,999	2,297	1.90%	95.78%	2.06	3.24
$250,000 and over	2,808	2.32%	97.68%	ca. 2	ca. 3
Total	121,084