How Much is Trillion?

With all the news and talk about taxes and deficits and such, I’d thought I’d share a few statistical perspectives with you – just for fun and cocktail conversations.

It’s hard enough to comprehend a million let alone a billion, but a trillion is almost beyond comprehension. To put the number in some perspective, there are approximately 300 million people in the U.S. as of July, 2007, according to the World Fact Book. A billion is 1,000 million, which means that a billion dollars is equal to about $3 per person in the U.S. and $1 trillion is equal to about $3,300 for every person in the U.S. Since there are about 100 million households, $1 trillion represents about $10,000 per household and $2.7 trillion is about $27,000 per household. That’s clearly more than the total income for a lot of households.

Based on an analysis of the 2007 federal budget, it appears that this budget total does include Social Security and Medicare tax collections, which represents about 1/3 of the total. Another 1/3 is from corporate income taxes and various excise taxes, with a little over 1/3 from personal income taxes. So that means that the average household would be paying about $9,000 of income taxes.

According to the National Taxpayer’s Union, the taxpayers in the top 50% (as measured by adjusted gross income) paid 97% of the individual personal income taxes in 2005. This means that about 50 million households paid nearly all of the personal income taxes. That works out to an average of about $18,000 of income taxes per household in the top half of the income category – which is in addition to their share of the payroll taxes and other taxes.

If we were to assume that the payroll taxes for Social Security and Medicare and the other taxes were shared equally, that would amount to about $18,000 per household. ($1.8 trillion / 100 million households) And the top half of the income earners would also pay an extra $18,000 per household for income taxes. But 60% of the income taxes are paid by the top 5% of income earners, which means that $600 billion of income taxes is being paid by about 5 million households. That works out to about $120,000 per household for those in the top 5% of income earners.

And some politicians are still saying that the “rich” aren’t paying enough taxes!

As John Stossel likes to say, "gimmie a break".

Vern Jacobs