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Income Inequality Quiz Answers

The quiz was probably tougher than I originally anticipated.  The quiz statistics:

  • Best score:  10 out of 11
  • Next best:  two scored 7 out of 11
  • Average score:  30.8%

Each question had a specific purpose.  I have outlined my reasoning over at the USMessageBoard in discussions on the economy.  See the questions and answers below…

  1. What is the definition of Income inequality?
    1. Although wealth is often injected, the primary debate surrounds annual earnings. The popular Thomas Piketty book “Capital in the 21st Century” and his research focuses on household incomes from IRS tax data.
  2. What are the most common sources used for income data?
    1. The three primary sources used in the discussion are:
      1. IRS tax data.
      2. Census Current Population Survey (CPS).
      3. CBO market income.
    2. Each of the sources account for income slightly differently. Understanding these differences will assist in interpreting your findings.
  3. How many individual tax returns were filed for 2012? (+/- 10 million)
    1. 144,778,000 tax returns were filed in 2012.
  4. How many individual tax returns make up the 1%? (+/- 100,000)
    1. 1,447,780 (1% of 144,778,000)
  5. What is currently considered poverty level income for a United Sates family of 4? (+/- $1,000)
    1. $23,850 – U.S. Dept. of Health and Human Services
  6. What levels of income are considered in the 80th percentile for all tax filers as of 2011?  (+/- $5,000) (NOTE:  This would mean you are in the top 20% of earners in the United States)
    1. $97,298 – Tax Policy Center
  7. How much income must be earned to be considered part of the 1% as of 2011?
    1. $506,553
  8. The Treasury Department conducted a study of income mobility from 1996-2005 (i.e. whether individuals tend to move into higher or lower income categories over time).  What percentage of taxpayers beginning in the bottom 20% of earners in 1996 remained in the bottom 20% of earners in 2005? (+/- 5%)
    1. Over the decade examined, 42.4% remained in the bottom 20% meaning 57.6 moved to a higher income quintile. 28.6% moved into the 2nd income quintile; 13.9 % moved into the middle income quintile; 9.9% moved into the 4th income quintile; while 5.3% moved into the top income quintile.
  9. In the same Treasury Department study, how many earners in the top 1% income category in 1996 remained in the top 1% category in 2005? (+/- 5%)
    1. 42.6% of top 1% earners in 1996 remained in the top 1% in 2005. 82.7 remained in the top 10% of earners in 2005.
  10. What is the highest tax bracket in 2014? (+/- 1%)
    1. 39.6%
  11. What is the lowest tax bracket in 2014? (+/- 1%)
    1. 10%

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