What Is The Real Income Of The Poor?: An Accountants Perspective

Abstract

The issue of poverty in America has been vastly studied in the economics, political science and sociology literatures. Conservative think tanks generally consider that official poverty statistics overstate the true nature of poverty in the U.S. while liberal organizations contend just the opposite. The aim of the current paper is not to settle this debate, but to add insights from an accountants point of view. Specifically, the current research will calculate the income of the poor, including tax credits and transfer payments, and then construct a family budget based upon the available income. These calculations, based on a family of four living at the poverty level in 2009, will be contrasted to a family of four living at New Jerseys median income. The main finding of this paper is that the real income of the poor is substantially above their salaried income.