Floyd Saunders, Author of Figuring Out Wall Street and Family Financial Freedom

Income, Taxes and Disparity in

America

Floyd Saunders, Author of Figuring Out Wall Street and Family Financial Freedom

“Facts are stubborn things; and whatever may be our wishes, our inclinations, or the dictates of our

passions, they cannot alter the state of facts and evidence . . .”

– John Adams

Floyd Saunders, Author of Figuring Out Wall Street and Family Financial Freedom

Key Concepts:

• Middle Class & the economy

• Taxes & incomes• Income Disparity

in American

There’s a lot to learn about incomes in America

Floyd Saunders, Author of Figuring Out Wall Street and Family Financial Freedom

Floyd Saunders, Author of Figuring Out Wall Street and Family Financial Freedom

U.S. Economic Growth

An expanding middle class is

essential to U.S. Economic

Growth.

It’s a consumption based

economy.

Floyd Saunders, Author of Figuring Out Wall Street and Family Financial Freedom

The Economic Cycle

70% of US GDP is Consumer Spending

Floyd Saunders, Author of Figuring Out Wall Street and Family Financial Freedom

Income in The American Economy

Increased Productivity =

Higher Incomes

Floyd Saunders, Author of Figuring Out Wall Street and Family Financial Freedom

Productivity

Productivity increases continued even during the 2008-09 recession

Floyd Saunders, Author of Figuring Out Wall Street and Family Financial Freedom

Pre-Tax Income 1979 to 2007

Incomes for 90% of Americans have remained flat or fallen during the era

of the “Bush Tax cuts

Floyd Saunders, Author of Figuring Out Wall Street and Family Financial Freedom

IF TRICKLE DOWN ECONOMICS AND TAX CUTS WORKED. . .

Then personal income would increase right?

“Job Creators” would expand jobs and the economy would grow, creating more tax revenues.

Floyd Saunders, Author of Figuring Out Wall Street and Family Financial Freedom

Changes in After-Tax Income

Most of the income gains occurred at the top, so where are the jobs?

Floyd Saunders, Author of Figuring Out Wall Street and Family Financial Freedom

Unemployment 2003 to 2012

Unemployment stayed low until the recession of 2008

But what about the promised Job Growth?

Floyd Saunders, Author of Figuring Out Wall Street and Family Financial Freedom

Job Growth After Tax Cuts

Not Fair, not sufficient time for the tax cuts to have the job creators hire people!

Floyd Saunders, Author of Figuring Out Wall Street and Family Financial Freedom

Tax Cuts and Job Creation

Floyd Saunders, Author of Figuring Out Wall Street and Family Financial Freedom

Jobs under Clinton = 22.7 million new jobs.Under Bush = 1.08 net new jobs.

Eisenhower

Kennedy/Johnson

Nixon/Ford

Carter

Regan

Bush

ClintonBush

Bush created new jobs in his first term right?

Floyd Saunders, Author of Figuring Out Wall Street and Family Financial Freedom

Right on Jobs, Republicans or Democratic?

• During the Kennedy, Johnson, Carter, Clinton and Obama administrations, a net increase of 44.7 million jobs were created.

• During the Nixon, Ford, Reagan and both Bush administrations. 23.3 million jobs

created. (Bureau of Labor Statistics)

Most jobs are created by small businesses, right?

Floyd Saunders, Author of Figuring Out Wall Street and Family Financial Freedom

Jobs Created by Small Businesses

Larger employers, hire a larger % of workers.

Floyd Saunders, Author of Figuring Out Wall Street and Family Financial Freedom

Personal Income

• Is your personal income growing?

• Staying the same?

• Or in decline?

An expanding middle class is essential to economic growth

Floyd Saunders, Author of Figuring Out Wall Street and Family Financial Freedom

US Income of Top 1%

While 90% of Americans have seen their incomes decline by 4%, incomes of the top 1% have grown significantly every year,

except for 2008-09.

Excessive wealth at the top is an

indicationof a coming recession

or depression.

Floyd Saunders, Author of Figuring Out Wall Street and Family Financial Freedom

Personal Income

2008 Recession

Floyd Saunders, Author of Figuring Out Wall Street and Family Financial Freedom

U.S. Household Income

Updated 9/28/2010

Floyd Saunders, Author of Figuring Out Wall Street and Family Financial Freedom

Average Income By Family

Bottom 90% of incomes in America averages $31,244

Forbes 400 richest Americans

Floyd Saunders, Author of Figuring Out Wall Street and Family Financial Freedom

Housing as Piggy Banks

• Starting in the 1970s, earnings were squeezed for low- and middle-income households.

• They borrowed to improve their standards of living — buying bigger houses than they could afford and using those houses as piggy banks.

• Families bet that housing prices would keep rising, making a three-bedroom outside Phoenix a safe store of wealth.

• But the housing bubble collapsed, and took the rest of the economy with it.

Floyd Saunders, Author of Figuring Out Wall Street and Family Financial Freedom

Taxes In America

What is a fair share of taxes to pay?

Floyd Saunders, Author of Figuring Out Wall Street and Family Financial Freedom

SO WHO PAY TAXES IN AMERICA?

Let’s start with who does not pay taxes, the now famous 47%

Floyd Saunders, Author of Figuring Out Wall Street and Family Financial Freedom

The 47% Who Don’t Pay Federal Income Tax

Floyd Saunders, Author of Figuring Out Wall Street and Family Financial Freedom

82 % Pay Payroll & Income Taxes

Floyd Saunders, Author of Figuring Out Wall Street and Family Financial Freedom

18% of Americans Pay No Tax

Floyd Saunders, Author of Figuring Out Wall Street and Family Financial Freedom

So Who Pay What?

Floyd Saunders, Author of Figuring Out Wall Street and Family Financial Freedom

Small Business Millionaires?

50% of the top income earners are in fact investors and hedge fund owners.

Floyd Saunders, Author of Figuring Out Wall Street and Family Financial Freedom

At What Point Should You Not Expect Someone to Pay Taxes?

Poverty level for a family of four = $23,201

46 million Americans live in poverty

Floyd Saunders, Author of Figuring Out Wall Street and Family Financial Freedom

Average Income and Taxes

Floyd Saunders, Author of Figuring Out Wall Street and Family Financial Freedom

Income Disparity in America

“Growth becomes more fragile” in countries with high levels of inequality like the United States - Jonathan D. Ostry of the International Monetary Fund

Floyd Saunders, Author of Figuring Out Wall Street and Family Financial Freedom

US Income Distribution Top 1% vs. 90% Average Income 1917 to 2009

Floyd Saunders, Author of Figuring Out Wall Street and Family Financial Freedom

President Reagan's first budget director David Stockman : “This debt explosion has resulted not from big spending by the Democrats, but instead the Republican Party's embrace, about three decades ago, of the insidious doctrine that deficits don't matter if they result from tax cuts.”

Federal Spending and Revenues 1979 to 2015 (est.)

Floyd Saunders, Author of Figuring Out Wall Street and Family Financial Freedom

Fun (or not so Fun) Facts

A rising tide does not necessarily lift all ships.

• Forbes 400 richest Americans have a combined net worth is $1.7 trillion– or the combine yearly household income

of more than 64 million Americans.• Between 1979 and 2007

– the top 1% of households doubled their share of pretax income

– while the share of the bottom 80% fell. (CBO)