FUN WHILE IT LASTED:

The core problem is that these statistics omit most government transfer payments to households in the bottom quintile, which more than quadrupled in inflation-adjusted terms from $9,677 to $45,389 between 1967 and 2017. In consequence, in 2017, while "the average household with earned income in the bottom 20 percent ... received more than $45,000 in government payments ... Census failed to count nearly $32,000 of those transfers" as income. Transfer payments include benefits like food stamps, the "refundable" Earned Income Tax Credit, housing supplements, Medicare, and Medicaid, with the Census Bureau counting less than a third of such payments made by federal, state, and local governments, which totaled $2.8 trillion in 2017, with over two-thirds going to the bottom 40 percent of households.

Additionally, in counting household income, the Census Bureau's statistics on inequality omit taxes levied on income by all three levels of government, of which 82 percent are paid by the top 40 percent of households. When adjustments are made for these omissions, income inequality proves to be only one-fourth as large as Census statistics indicate. And far from rising by 22.9 percent since 1947 as the Census numbers make it appear, inequality has fallen by 3 percent since 1947. Finally, once all transfers are counted, "the number of Americans living in poverty in 2017 plummets from 12.3 percent, the official Census number, to only 2.5 percent."

Allowing that some few people who are "physically or mentally unable to care for themselves" may have "fallen through the cracks" in the social-welfare system, the authors conclude that "for all practical purposes, poverty due to a lack of public or private support has been virtually eliminated in America." Meanwhile, contrary to the often-heard charge that the rich don't pay their "fair share" of taxes, "households in the top fifth of income earners lose 35.2 percent of their pretax income to taxes of all kinds," while "those in the bottom fifth ... lose only 7.5 percent."

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