johnstonDavid Cay Johnston, who tracks inequities in income distribution and tax policies, has challenged a claim on this website yesterday that believers in a widening gap between rich and middle class are failing to count transfer payments such as Medicare, Medicaid and employee benefits to the middle class.

Johnston, former New York Times reporter and author of three books on economic topics, said that his calculations do include such “downward transfers.” They made up 3% of the Gross National Product before the 2008 recession which is about half of what is spent on this in other modern democracies, he said.
 
This website quoted private equity executive Robert Grady as writing in the Dec. 23 Wall Street Journal that descriptions of middle class income fail to count “America’s highly progressive income tax system and the panoply of benefits and transfer payments.”

Grady is chief economic adviser to New Jersey Gov. Chris Christie.
 
Johnston said he has documented the “massive upward distribution” of income in books and numerous columns.

Income Stagnates for Bottom 90%

The average income of the bottom 90% of taxpayers in 2012 was slightly lower in inflation-adjusted terms that in 1966 when Lyndon Baines Johnson was president, he said.

“The income of the top 1% of the top 1%, at the same time, soared to around $25 million, roughly five times in real terms what was in 1966,” he added. “The median wage, official documents show, has been stuck since 1998 at a little over $500 a week in today’s money while the number of workers paid $5 million or more, while small, has exploded along with their average pay.”