The gap between rich and poor; smaller than advertised

Here are some interesting numbers from the IRS linked by my friend Cold, where apparently even if we took all of the income earned by people earning more than $500,000 in 2006, it would have only netted the Treasury about $1.3 trillion.

Now apart from the idiocy of the very idea of taking operating funds away from employers, there is something else very interesting, and I believe the WSJ makes an error in their analysis.

Specifically, 1.65 million tax filers making more than about $388,000 in 2006 does NOT equate to a mere 1% of the population; keep in mind here that these are 1.65 million tax returns representing that many families.  To put this in perspective, the Census bureau estimates about 115 million households this year.

In other words, 1.65 million returns is not the top 1%, but the top 1.5%.  In the same way, 3.8 million households earning more than $200,000 per year is not the top 2%, but rather the top 3.5%.  Correct for the fact that married couples earn more and have more children, and we're most likely talking about the top 2-3% of people sharing income exceeding $400,000 per year, and the top 5-6% sharing income of over $200,000 per year.

So how "rich" are those 1.65 million families?  Well, that 2-3% of people shares 22% of the gross income, but gets to keep only about 2/3 of it (say 15%), so when you count in government payments and taxation......they have somewhere between five and eight times more spendable resources than average.

Better than a poke in the eye with a sharp stick, but it's hardly a hereditary oligarchy of wealth--as anyone who has read and understood The Millionaire Next Door knows very well.  Now if only we could get Democrats to read and understand this book....