Income Disparity in the U.S: A Simple Analysis

     I was curious how graphs of income disparity in the U.S. would look so I gathered some data and made some simple graphs. Data comes from AFL-CIO, DQYDJ, the IRS, and others. I made some educated guesses as well. It should be pointed out that salary is only a part of income, especially for executives and CEOs who get much more from other perks like stock, stock options, and much more.

     As can be easily seen the graph is a pretty steady incline from slavery/poverty to the average U.S. salary. This is all before taxes. The average cost of rent in the U.S. is $1372/month, or 16,464/year. This is 66% of the low minimum wage of $25000/year (before taxes) and 53% of the high minimum wage of $31000/year (before taxes).

     The graphs speak for themselves. I added in the 2025 social security limit, above which there is no social security tax. It is now up to $176,000. Any income above that is not taxed, which effectively is a 6.2% tax break for that income which offsets higher rates from entering higher tax brackets. The 2025 rates are shown below.

 

Thus, when we subtract the SS tax from total taxation, 24% becomes 17.8%, 32% becomes 25.8%, 35% becomes 28.8%, and 37% becomes 30.8%. Those are the real, or effective, tax rates. Thus, the highest tax rate for those CEOs and billionaires is 30.8% while the highest rate for those making more than $48475 is 22%, hardly a difference.

     The average CEO salary ($17.7million) is 239 times the average U.S. salary ($74,000- oh what I would give to make that much). The average CEO does not pay social security tax on 98.3% of their income since that is how much of their income is above the limit. 

     Just look at the simple data and you can see that income disparity is something we will have to address eventually. It is inherently unfair. We have billionaires now who are halfway to becoming trillionaires, a word that should only exist in the imagination, not in reality. These are simple graphs of simple data. Graphical evidence is useful to show situations such as this that are perhaps harder to get our brains around because, frankly, they are so absurdly unfair. If you know what it’s like to be poor, to be lower on Maslow’s hierarchy of needs, then you know that life can be unfair. It’s not just life that is unfair but the treatment (by the government, by our business leaders, in some ways by our economic system) of people’s means to get by is also obviously unfair. One of my MAGA friends posted a reminder meme today that ‘Taxation is Theft.’ Perhaps it seems that way if you’re poor but not if you’re rich. Tax is such a small problem for the rich, it can easily be covered by them, yet many of them don’t even file, but choose to cheat. The IRS caught some with new funding efforts toward the problem, recovering billions for the government  but Congress has chosen to claw back much of that funding. Incidentally, the idea that taxation is theft is supported by several different political philosophies. According to Wikipedia:

“The position is often held by anarcho-capitalists, objectivists, most minarchists, right-wing libertarians, and voluntaryists, as well as left-anarchists, libertarian socialists and some anarcho-communists.”