Why America's Inequality Story Doesn't Add Up |
Economics
Andrew Heaton | 1.2.2026 1:55 PM
If you're like most Americans, you get the bulk of your cardio from marching in—or fleeing from—pitchfork-wielding mobs. These days, those mobs tend to be chasing oligarchs with their fancy castles and grave-robbing sidekicks. Inequality, we are told, is spiraling out of control.
But that's wrong. America doesn't actually have an inequality problem. We have a measurement problem.
Most of the infuriating headlines about inequality rely on data from the Census Bureau. And when the Census Bureau calculates inequality in the U.S., it leaves out two very important things: taxes and redistribution.
The Census Bureau looks at pre-tax income. If you earn $100,000 a year and pay $20,000 in taxes, the Census Bureau counts you as earning $100,000, not the $80,000 you actually take home.
That missing $20,000 doesn't vanish. The federal government redistributes it to the lowest quintile of Americans through food stamps, housing vouchers, Medicaid, child tax credits, Section 8 housing subsidies, and dozens of other programs. But almost none of that is factored into inequality statistics. There are over 100 federal programs that each redistribute over........