The Two Income Trap says the following:
While family income has increased a great deal in real terms in the last 40 years, so have expenses, leaving the average family marginally worse off. Why?
2IT response: Expenses rising faster than income in real terms. Details:
75 percent higher [income]However, Todd notes that this explanation cheats MASSIVELY. Only by careful obfuscation do you get the number 25%...in reality, if you measure tax expeditures the way you measure any of the other factors, it looks more like this:
mortgages (up 76 percent), cars (up 52 percent), taxes (up 25 percent), and health insurance (up 74 percent)
tax expenditures rose 140%So with increases in income, many big expeditures (mortgage, health insurance) kept up with increases in income (not that surprising...we should see education on that list too). However, taxation increased by 140%...which cancelled out all the gains for the average family. Government=parasites. Had they paid the same amount in taxes (a lower percentage rather than a higher percentage), in the last few years, rather than having exactly the same disposable income as a 1970s family (about 17k), they'd have done better than a 2/3 increase in standard of living, (about 29K) . Even a flat tax RATE would leave extra on the table, increasing the average family's discretionary income by about 1/4 (about 22K).
The key point, again.
Incomes are up 75% on the average family in 40 years.
Government taxation is up 140% on the average family in 40 years.