If I understand this correctly: the IRS data show that in 2004, 26 million tax returns were filed, with an average AGI (adjusted gross income) of $5,743.
There are several problems with the article, based on this.
These returns are not necessarily from the ‘poorest’ people, in the sense that ‘poor’ is usually understood. These returns are the people who managed to find the smallest AGI to report to the IRS, after adjusting for business and other losses. This difference may not be insignificant. Notice the 1.8 million returns with negative income. Also notice the amount of dividend income, even in groups with the smallest positive AGI. There are a lot of returns in the lowest 20% that do not correspond to poor people.
I assume that the comment regarding high-income people hiding income was particularly directed at this point – people may show up as low-income, but be actually be well-off.
Returns with a low AGI do not necessarily reflect people living from income reported on the return, not only because they may receive other payments, but also because they may be dependent members of other households. Notice that for an AGI of $1 to $5000, the number of returns on which no exemptions are claimed, not even for the filer. This presumably means that the return is filed for someone who is a dependent on another return.
It is hard to tell how many low-AGI returns are filed by people who are not poor, but it appears to me that at least 4-5 million returns out of the 26 million do not appear to reflect people who are poor. This effect is particularly pronounced among the lowest-income returns.
However, there is a further problem: going from 26 million returns to 60 million people. This assumes that each return reflects 2.3 people. This is obviously wrong for the low-AGI returns. The total number of exemptions claimed on all tax returns is approximately 264 million, reflecting on the order of 1 exemption per person in the US. The total number of exemptions claimed by the lowest 20% of returns is no more than 27-28 million. These exemptions reflect people claimed to be dependent on the income.
So, I calculate the actual AGI per person for the lowest 20% of the returns as being around $15/day. If corrected for returns that do not reflect people who are poor (for example, people claimed as dependents on other returns), the number would rise.
