The Myth of American Inequality

Phil Gramm, Robert Ekelund & John Early

The Census Bureau’s income measurements, rooted in a 1947 framework, include only cash payments while excluding in-kind government benefits such as food stamps and subsidized healthcare. This outdated approach distorts the true financial picture of American households, as over two-thirds of government assistance is omitted from official income statistics. For example, households in the lowest income quintile report earning $4,908 annually but actually receive $45,389 in transfer payments, highlighting the need to account for these benefits to better reflect their living standards. Similarly, the portrayal of income inequality is skewed by the exclusion of after-tax income, which significantly narrows the gap between the top and bottom quintiles. While top quintile households earn over 60 times more, they retain only four times as much after taxes and transfers, challenging the official narrative and fueling debates over income redistribution.

3 min

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De quoi s'agit-il ?

The core premise of this analysis challenges conventional views on income inequality in the United States by exposing critical flaws in how official statistics are calculated. It explores how the exclusion of in-kind government benefits and after-tax income from these metrics distorts public perception of poverty and wealth distribution. By examining the significant impact of transfer payments and tax adjustments, the text reveals a more nuanced and accurate picture of household financial resources. This thought-provoking discussion invites readers to reconsider the fairness and effectiveness of the current income redistribution system.

Résumé du livre

Phil Gramm is a former senator who spent years heading up the US Senate Banking Committee. He is currently a visiting scholar at the American Enterprise Institute.

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