Tuesday, January 07, 2003

According to CNN the median adjusted gross income in the U.S. $66,619 (numbers taken from the Tax Foundation)

According to the White House, the median household income (not quite the same thing) in 2001 was $42,228.

Can anyone explain this to me?

(update: I accidentally misread that the numbers were from the Tax Policy Center. They're from the Tax Foundation, which is a whole other ball of wax...still looking into this...)

Okay, due to suggestions from various people, particularly reader s.v., it seems that what the Tax Foundation is doing is using the median income figure for 2 earner households. Then, they're strangely switching over from household income to household adjusted gross income. The effects of the first switch are obvious, and since AGI is always a bit lower than actual income, they're calculating the tax benefits for people with much higher actual incomes.

Let's see if I can say that simply:

They're taking a two-earner family which has an adjusted gross income (AGI) equal to the median income of the two earner households, and calculating their tax benefit assuming they have two children. This skews the value of median household income value upwards (fine, but they should be more clear), calculates the tax benefits for families that have actual incomes even higher than this, and then throw in the mandatory two kiddies.

I think.

In other words if you're a two earner house hold with two kids making $66K gross income, your tax benefit isn't going to be as high as they're claiming.