New IRS Data Show the Wealthy Grew Even Richer in the Trump Years While the Rest of Us Fell Back
Remember Donald Trump bragging about what a fabulous job he did raising the incomes of what he called “America’s Forgotten Men and Women”? Chalk that up as yet another Trump con job. Most of the 160 million taxpaying American households were worse off, even before the Covid pandemic struck.
Average incomes fell in 2019 compared with 2018, data released Wednesday by the Internal Revenue Service show.
The real shocker: Most American households made more money during Barack Obama’s last year as president than in Trump’s third, my analysis of IRS data reveals.
We can expect that when figures for the plague year 2020 are released next year the falloff will be much, much greater.
Under Trump, the share of total income going to the prosperous and wealthy grew by a whopping 17% between 2016 and 2019.
Trump true believers may insist this can’t be so, but the truth comes from the Trump administration’s own data. Indeed, the IRS commissioner serving today, Charles Rettig, was appointed by Trump, so there’s no reason to doubt this data. I have analyzed such material for decades.
More for the Already Rich
Trump was also in charge when the national income pie was re-sliced with the six million most affluent households enjoying a much larger share.
Under Trump, the share of total income going to the prosperous and wealthy grew by a whopping 17% between 2016 and 2019. That means most Americans received a thinner slice of the national income pie in 2019. More people divvying up less income pie means smaller slices for most.
Of course, more for the best-off and less for the rest is the opposite of what Trump consistently promised voters from the day he launched his presidential campaign six years ago. No doubt, he will promise the same again.
As candidate and president, Trump charged that elites rigged the economic system in their favor, a charge I made long before he did. I know from his own people that he watched me on television discussing this as far back as the turn of the century. But Trump made the audacious claim that he alone could put a stop to that by “draining the swamp” in Washington.
Again and again, Trump called out to the “poorly educated,” saying he loved them and promising to be their champion. What the official facts show is that he hit the poorly educated upside the wallet with a two-by-four.
Few people make $250,000 a year or more, the top category in the new IRS data. And very few of the rich suffer from inadequate education. It’s education and highly developed mental skills that employers reward with fat paychecks.
Trump pursued the crazy idea that being poorly educated was a social good in everything from refusing congressionally ordered relief to student loan borrowers to denigrating higher education and denying science.
He fostered racial and religious hatred to distract people from how his economy was of the rich, by the rich and for the rich at the expense of the poorly educated.
Among all households, the average 2019 income was $76,152 compared with $77,294 the year before, my analysis of the new IRS data shows. That’s a decline of $1,142 a year or $95 per month.
Most Make Less
Let’s look only at the 96.3% of households making less than a quarter-million dollars. Average income slipped from $52,903 to $52,661, a one-year decline of $242.
The 2019 average income for these households was also lower than under Obama. In 2016 this group averaged $52,978. That means these households averaged $318 more under Obama, my analysis shows.
These are averages, which means some people did better and some worse. For averages to fall, many people must do worse or be additions to the lower rungs of the income ladder where the poorly educated tend to concentrate.
As for people who own businesses, average incomes in 2019 were flat after adjusting for a 1.8% increase in the number of small businesses. Despite all the rhetoric about America being a land of entrepreneurs, small business profits account for less than 3% of total adjusted gross income, which is the last line on the front page of your form 1040 tax return.
These figures all come from the first IRS data table based on the 159.7 million individual income tax returns filed for 2019. A detailed report is due in the fall.
I’ve analyzed this data since 1995 to track income trends, including the divvying up of the national income pie. All the money amounts in this column use 2019 dollars.
Why Incomes Shrank
The fact that most Americans had smaller incomes in 2019 than 2016 occurs despite the size of the American income pie growing over those three years by more than 12% to nearly $12.2 trillion.
Households making a quarter-million dollars or more increased from about 4.4 million to 5.9 million. That’s a 34% increase compared with a 6% increase in the total number of tax returns, showing how growth is up the income ladder.
The quarter-million-dollar-and-up households expanded their share of income pie from 28.6% under Obama to 33.4% under Trump.
From the perspective of these high-income households, that’s a 17% larger slice of the pie. That meant everyone earning had to divide a smaller share.
Average incomes in the quarter-million-and-up group slipped from $697,044 in 2016 to $687,588 per taxpayer household in 2019. That’s because most of the 1.5 million new households in this high-income category entered it near the threshold, bringing down the average.
This new data is consistent with my earlier DCReport analyses. They showed that average incomes grew in 2017, continuing a trend that began under Obama in 2010 and continued in 2018. However, under Trump job growth ran about 3% slower.
The 2019 average income declines conform with other data that you probably haven’t known about unless you read DCReport, where I used the Trump administration’s own data to measure its performance.
In October 2020, I reported on fresh evidence that the robust economy Trump inherited from Obama was faltering before the pandemic as personal spending declined in 2019 compared with 2018.
A month before that, I reported that new government data showed that in the wake of the Trump tax cuts, which took effect in 2018, the poor and working classes were sinking. Meanwhile, the middle class was treading water. The tax cuts buoyed the upper-middle class while the very rich luxuriated in rising rivers of greenbacks.
More than half of Americans had to make ends meet in 2018 on less money than in 2016, my analysis of the latest official data showed at that time.
DCReport even gave Trump a certificate of mediocrity in early 2020, using his administration’s own data to analyze his economic performance.
Even earlier, in spring 2019, I showed that Trump’s economy underperformed a host of presidents including Ronald Reagan, Jimmy Carter and Obama, once the economy he inherited turned around. I gave Trump a grade of C, later revised to C- after new data arrived.
Now how to get Trumpers to recognize the awful truth that he made their plight worse, except for those in the elite income group of a quarter-million dollars or more per year?
Featured image: Trump and congressional Republicans celebrate their 2017 overhaul of the U.S. tax system. (CNN)