A Comment About

Who Says 60 Million Americans Live on $7 a Day?

January 10, 2008 - 12:01 am - by Annie Jacobsen
David Cay Johnston
2008-01-10 08:24:21

Annie Jacobsen,

You question the accuracy of my article in The New York Times back in 2006, on then newly released IRS data. Your commentary starts off with a fact in other articles that you trace back to my report.

My article as accurate, and my official sources were all cited. You can verify the numbers yourself by just doing the math from the data tables, which are at irs.gov/taxstats.

My article stated that the average incomes of American as reported on income tax returns, when adjusted for inflation, was smaller in 2004 than it was in 2000. (I also wrote a number of articles about the 2005 data, all available free at nytimes.com.) I quoted a White House spokesman as saying this was “predictable.”

My 2006 New York Times article also carefully noted that the figure does not include government benefits such as welfare, disability and most Social Security payments.

I also reported that the poor were the only group whose average income rose, in real terms, from 2000 to 2004. The poorest fifth, the 26 million taxpayers (and 60 million people) saw their incomes rise in real terms by 2.4 percent on average, the data I analyzed showed.

Way down in the 15th paragraph I reported that the bottom fifth reported on their tax returns incomes of $11,166 or less and that their average income was $5,743. These are my calculations, but you can do from the same IRS tables, dividing income by taxpayers.

Keep in mind that the bottom half reported incomes of $30,122 or less on their tax returns for 2004 and that the average income for the bottom half was less than $15,000.

You can see the first number and calculate the second from data going back many years (NOT adjusted for inflation) posted by the Tax Foundation, a group that seeks lower tax burdens, at taxfoundation.org/taxdata/show/250.html

Since the bottom half averaged less than $15,000, it should not surprise that the bottom fifth averaged less than $6,000 of income, as reported on tax returns.

So the $7 per day figure comes right out of the IRS tables so you can do your own math.

Before my article ran I carefully checked and cross-checked that numbers, including speaking to the supervising statisticians who prepared the tables.

The White House found nothing controversial in the numbers I reported — nor would anyone else who works with and is familiar with the various government sources of income data. (I also quoted the similar response of the official administration spokesman in my comparable report on 2005 incomes.)

The accurate numbers I reported are carefully presented in context, citing sources and limitations, contrary to the anonymous Engram, on whom you rely and whose own report is rife with faulty assumptions, errors, conflating.

People who posted in response to your writing also make false assumptions.

I never was trained at Columbia. I have been a reporter for more than 40 years and my work has been the subject of all sorts of independent inquiries from lawsuits involving others to Congressional hearings and history has shown that my work stands up.

One poster, not having read my work, asserts I should study economics, I studied economics at the University of Chicago graduate school for two quarters in 1973 and at six other colleges.

I have also written two best-selling books on the American economy, specifically how its tax and subsidy systems actually work, as opposed to the myths perpetrated by politicians of all stripes.

The first book, Perfectly Legal, was reviewed by experts across a broad spectrum with near universal praise. My latest book, Free Lunch, out just two weeks, has been favorably described by an equally broad spectrum of readers from libertarians to progressives.

You write that I did not respond to your email. My email address is on the Internet and so are my office and personal telephone numbers. Where did you send your email?

I forthrightly correct actual errors in my work.

The White House, Treasury and IRS had not even a quibble about my report when it came out — and these agencies do not hesitate to complain about not just errors, but matters of nuance.

My report mentioning the $7 per day income figure for the poorest fifth of is accurate and was presented in context.