Who taxes Internet income?

Has inflation adjusted median household or 'middle class' income increased in the past 50 years in the US?

• Subtitle: Adjust that to working hours, too. First let me be clear about the working definition of the middle class we will use here. I really like the concept of median income: the income to which 50% of households have more, the other 50% have less. The question is how this median income changed over the part 50 hears, inflation adjusted. Middle class - by our definition for this experiment - is the 3rd in the the 5 equal 20% segments of the population by income: "Since we know http://www.joshuakennon.com/are-you-an-average-american-worker/, this is a nice premium.  (If your household makes more than that amount, you are by definition not middle class.  That range is the point at which 2 out of 5 households are richer and 2 out of 5 are poorer than your family according to the Federal Reserve.)" - http://www.joshuakennon.com/the-price-of-happiness-science-confirms-it-is-75000-per-year/ The Federal Reserve Bank San Francisco made a study but they used a mre complicated definition of the middle class: http://www.frbsf.org/economic-research/publications/economic-letter/1997/march/the-shrinking-middle-class/ Graph from the study: I however really like to keep things simple: middles class -> median income. George Friedman of Stratfor has this to say: http://www.stratfor.com/weekly/crisis-middle-class-and-american-power "The median household income of Americans in 2011 was $49,103. Adjusted for inflation, the median income is just below what it was in 1989 and is $4,000 less than it was in 2000. Take-home income is a bit less than $40,000 when Social Security and state and federal taxes are included. That means a monthly income, per household, of about $3,300. It is urgent to bear in mind that half of all American households earn less than this. It is also vital to consider not the difference between 1990 and 2011, but the difference between the 1950s and 1960s and the 21st century. This is where the difference in the meaning of middle class becomes most apparent. In the 1950s and 1960s, the median income allowed you to live with a single earner -- normally the husband, with the wife typically working as homemaker -- and roughly three children. It permitted the purchase of modest tract housing, one late model car and an older one. It allowed a driving vacation somewhere and, with care, some savings as well. I know this because my family was lower-middle class, and this is how we lived, and I know many others in my generation who had the same background. It was not an easy life and many luxuries were denied us, but it wasn't a bad life at all. Someone earning the median income today might just pull this off, but it wouldn't be easy. Assuming that he did not have college loans to pay off but did have two car loans to pay totaling $700 a month, and that he could buy food, clothing and cover his utilities for $1,200 a month, he would have $1,400 a month for mortgage, real estate taxes and insurance, plus some funds for fixing the air conditioner and dishwasher. At a 5 percent mortgage rate, that would allow him to buy a house in the $200,000 range. He would get a refund back on his taxes from deductions but that would go to pay credit card bills he had from Christmas presents and emergencies. It could be done, but not easily and with great difficulty in major metropolitan areas. And if his employer didn't cover health insurance, that $4,000-5,000 for three or four people would severely limit his expenses. And of course, he would have to have $20,000-40,000 for a down payment and closing costs on his home. There would be little else left over for a week at the seashore with the kids." - I care about the technological improvements from 50 years to now only selectively: - It is not interesting that 50 years ago you could only watch TV and now you can surf the Internet as well. - It is important to note however that 50 years ago air travel was a luxury and now you can fly for cheap on low cost airlines. Some other considerations for reference: - http://www.joshuakennon.com/are-you-an-average-american-worker/ - http://www.joshuakennon.com/american-manufacturing-profits-same-as-1960/ What is your conclusion? Adjust the median income then and now to the working hours needed as well.

• Answer:

  The median household income has increased slightly (20%) over 45 years. The median per person income has declined: the difference is that many more households now have two wage earners than in 1965. In 2012 the median household income was $51,017 In 1965 the median household income was $42,934 ie 19% increase or 0.3% per annum increase [1], [2] Over the period the USA GDP quadrupled If the median household income had kept pace with the economy since 1970, it would now be nearly $92,000, not $50,000. And, of course, this is per year income. Since working hours have increased Not only are Americans working longer hours than at any time since statistics have been kept, but now they are also working longer than anyone else in the industrialized world. And while workers in other countries have been seeing their hours cut back by legislation focused on preventing work from infringing on private life, Americans have been going in the other direction. Schor's 1997 book, which became a bestseller, stated that in 1990 Americans worked an average of nearly one month more per year than they had in 1970. Statistics indicate that the trend she described hasn't been reversed in the last decade. [3] [1] http://www.census.gov/prod/2013pubs/p60-245.pdf [2] http://www.davemanuel.com/median-household-income.php [3] http://abcnews.go.com/US/story?id=93604