A lot of Americans believe the American Dream as well as the concept of the middle class has come to an end. The amount of taxes, the erosion of the United States dollar, the rising cost of living and a weak economy are all ingredients for a recipe to the collapse of the middle class.
At the same time, however, if you have $10 in your pocket and zero debt then you’re richer than 25 percent of Americans!
A new report from the Social Security Administration (SSA) discovered that more than half (51 percent) of workers in the U.S. earn less than $30,000. With rents and housing costs reaching all-time highs, it can be pretty tough for a family to live on that amount of money, which is equal to $2,500 per month. Don’t forget about the taxes!
Here are the 2014 figures from the report that was released this week:
– 71 percent of U.S. workers earned less than $50,000.
– 62 percent of U.S. workers earned less than $40,000.
– 51 percent of U.S. workers earned less than $30,000.
– 38 percent of U.S. workers earned less than $20,000.
– 14 percent of U.S. workers earned less than $5,000.
As Michael Snyder of The End of the American Dream opines:
“And of course the numbers above are only for those that are actually working. As I discussed just recently, there are 7.9 million working age Americans that are ‘officially unemployed’ right now and another 94.7 million working age Americans that are considered to be ‘not in the labor force’. When you add those two numbers together, you get a grand total of 102.6 million working age Americans that do not have a job right now.”
It should also be noted that one-quarter of Americans maintain a negative net worth, according to a new report from Credit Suisse.
In its annual Global Wealth Report, released last week, Credit Suisse estimates that half of the world has a net worth of less than $3,210. Unfortunately, a large number of Americans and Europeans can’t even have that because their net worth is negative.
“If you’ve no debts and have $10 in your pocket you have more wealth than 25% of Americans. More than 25% of Americans have collectively that is.”
Although the major headline was that the one percent own half of the nation’s wealth, the real headline should be that you’re richer if you have a few bucks in your pocket and absolutely zero debt! Considering how indebted everybody is, if you’re reading this article then there is a good chance you’re richer than the person next door.
In the U.S. the poorer half of the population went from a 3.6% share of wealth to a 1% share – about the same as the global average. At the other extreme the richest 10% in the U.S. went from a 67% share to a 75% share. This left only 24% for the U.S. middle class which isstill twice the 12% middle class global average.
The bad news is that the U.S. rich keep getting richer and the poorer half have given all they can. The next two decades will see and accelerated decline in the share of middle class wealth as it trends towards the global average. This is a function of the tax system which transfer wealth from the middle class to the rich. Most tax expenditures favor the rich and the 15.3% payroll taxes apply mostly to the middle class (because the poor have offsetting tax credits).
The 2-4-8 Tax Blend described at TaxNetWealth.com is the best solution to wealth transfer away from the middle class.
More than anything this story tells us the employers will have to be forced to raise wages. $10 minimum wage indexed to inflation would be a good start. Minimum wage has not been raised at the federal level since 2009. If you live in a state like Montana it is up to $8.05 per hour. Since 2008 MT has increased the minimum wage 80 cents per hour. All the doom and gloom stuff from the business owners before the law passed, Loss of jobs, price increases, businesses closing; never happened.
Record corporate profits, record low wages for the bottom 50% of workers over the last 40 years is the real reason the economy is in trouble. If you put more money in the lower middle class workers paycheck they will spend it; providing more jobs and keeping people employed.
The tax code needs to be changed and the first $50,000 needs to be exempt from taxation for everyone. Then start taxing $50,001 and up. No further deductions for anyone and the top tax rate could be lower than it is today because no one would get any additional tax breaks. Then everyone in each tax bracket would pay the same amount, no matter how they spent their money.
The road to serfdom continues.
Leave the WE The People with little or no hope and even less resources and they will become eventually discouraged to the point of surrender.
But what do they have to surrender?
Consider that old saying:
An Empty Stomach makes for a Willing Slave.