What is our “Fair Share” of the Federal Budget?

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It is Sunday, and I spent the morning playing with my kids, as my wife watched a little CNN for the weekend politics. Obama has a lot to say about people pays their fair share, and it got me thinking, I wonder what is my fair share.

Since income inequality is often analyzed by dividing wealth by population, then looking at the distribution of actual wealth vs. even distribution, I thought I’d try to do the same with the federal budget and see what my fair share is, and see if I am paying it… The enacted federal budget is 3.796 Trillion and there are 117.5 million households. Dividing the budget by households means each of our fair share is $32,306.

Holly cow, I had no idea our federal government was spending that much. Looking it as a per household figure is really eye opening.

$32,306 – Wow.

$32,306 is our fair share of the government bill – but who pays that much?

I looked up the federal tax schedule, and plugged in 50,000 in income for a married household. The taxes paid are $6,654. Somebody else is picking up the remaining $25,653 bucks.

I plugged in 75,000 for a single person. The taxes paid: $14,881 — less than half the fair share of the tax burden.

80% of American households earn less than 100k, so I plugged that in. A married household will pay $17,244, leaving a little over $15,000 for someone else to cover. So where is the point where people begin to pay their fair share? For a single earner, it is $147,796. For married, it is $167,610. From this income level and above, they pay their fair share of $32,306 and more.

As I looked again at the income distribution, only 5 percent of households earn $166k or more. That means 95 percent of Americans are paying less than their fair share.

There is no question that I have benefited from government assistance. As a child, we needed food stamps, and school lunches. And, I’ve built a business, and am fortunate to be paying more than my “fair share” of the U.S. Government. It disturbs me that the political debate has vilified the rich as taking from the poor. In my lifetime, I have spanned the lowest “below the poverty line” income class and the highest — it seems to me we should be trying to figure out how to create the environment for more people to attain have economic mobility. I don’t think that comes from redistribution as much as it comes from wise investments in education and programs that give people opportunity rather than handouts.

Government is expensive. We need more people able to pick up more than their fair share of the tab.

Explanation of graphic: At the top is the number of US Households, arranged by income. Income is listed below. With a few small markers — For example, 80% of households make less than $91,705. The blue bars below show the percent of the “fair share” of US Government annual budget paid at each income level. I’ve calculated this using IRS website for both married and single. Other sources: Household calculations:

http://visualizingeconomics.com/2006/11/05/2005-us-income-distribution/#.UDGVRUKmBjg (using 2005 Income Distribution from Census). Federal Budget comes from: http://federal-budget.findthedata.org/l/83/1980 (I did not include the accumulated debt, which weighs in at over 130,000+ per household, last I checked).

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