Personal income is up - but so what?

Take away transfer payments like Social Security, Medicare, and health insurance - stuff that we never really see - and actual taxable income per capita fell 3.4 percent since 2000, according to University of Michigan economist Don Grimes. "Most people are not going to feel better off if their employer has to pay higher health insurance premiums, even if to government statistics experts it is the appropriate way to measure our well-being, which strictly speaking it is," said Grimes. From press release:

Grimes says that in 1929, the year of the stock market crash, taxable income accounted for 98 percent of adjusted personal income, while nontaxable income was just 2 percent of adjusted personal income. By 2010, taxable income had fallen to 71 percent of adjusted personal income and nontaxable income had risen to 29 percent of adjusted personal income. "This 80-year-long trend is unsustainable and is now reaching the breaking point," Grimes said. "Between 1929 and 2000, we were able to sustain the growth in transfer payments by increasing the tax rate on higher and higher levels of taxable income. So long as taxable income per capita was increasing, there was a social consensus, more or less, that we would share an increasing proportion of earned income with people collecting transfer payments.