Your Share of the National Debt is NOT $120,000.
Jeremy's Debt Blog
- Posted:
1/15/2008
I've seen countless articles talking about the national debt and what "my share" of it is. The story usually goes something like:
The US National debt has reached a record new high of $9,000,000,000,000.00. (It would be too easy to just say $9 trillion, you have to make the reader count the zeros so it looks bigger). There are about 300 million US citizens, meaning every man woman and child owes $30,000. To which the reader is suppose to think. "I have a family of 4, and last I checked my kids weren't paying taxes. I guess that means I owe $120,000! Oh no! Uncle Sam is going to be sending his henchmen to my door to collect any minute now!"
Now, I'm not trying to make light of the National Debt. It is a big issue and something that needs to be addressed. But this business of every news site calculating out "your share" needs to stop.
The numbers are accurate, and with all things being equal every person's share would be $30,000, but we all know all things are never equal. Fortunately, in this case, it probably works to your advantage. I'm sure you've heard the other comment sites like to quote "The richest 2% own half the world's wealth". What they don't mention is they also pay pay the lion's share of taxes and bear the a much bigger share of the national debt.
The annual "on-budget" income for the federal government is about $1.8 trillion. On-budget meaning it excludes taxes for items like Social Security and Medicare which doesn't go into the primary budget and is also taxed separately. This means to pay off the debt, the US government would have to dedicate 100% of the budget to it for exactly 5 years. That's never going to happen of course, but it does make it very easy to calculate what "your share" is.
If it would take 100% of the budget for 5 years to pay off the debt, "your share" is 100% of what you pay in federal taxes for 5 years. Still a huge number, but for the average, middle class family of four making around $60,000 a year, it's no where near $120,000.
Here's a chart to give you an idea of what "your share" is based on your income. This is based on taxable income assuming no deductions, which is never the case, even if you're filing 1040EZ. In most cases your taxable income after deductions is going to be somewhere between 50-75% of your actual income.
| Taxable Income | Annual Fed Taxes | "Your Share" |
| $10,000.00 | $1,000.00 | $5,000.00 |
| $20,000.00 | $2,217.50 | $11,087.50 |
| $30,000.00 | $3,717.50 | $18,587.50 |
| $40,000.00 | $5,217.50 | $26,087.50 |
| $50,000.00 | $6,717.50 | $33,587.50 |
| $60,000.00 | $8,217.50 | $41,087.50 |
| $70,000.00 | $10,347.50 | $51,737.50 |
| $80,000.00 | $12,847.50 | $64,237.50 |
| $90,000.00 | $15,347.50 | $76,737.50 |
| $100,000.00 | $17,847.50 | $89,237.50 |
So for the average middle class family of four, making around $60,000 a year, your taxable income is most likely closer to $40,000 making "your share" of the national debt
$26,000 NOT
$120,000. That is $6,500 for "every man, woman and child" in your family instead of $30,000.
I'm sure you have a warm fuzzy feeling now, knowing you have an extra $26,000 in debt, but hey, at least it beats the $120,000 those other sites are telling you, you owe. That's what we're here for, to settle
all your debt for "pennies on the dollar". ;-)
One fact I was looking for but couldn't find is how much the U.S. has is accounts receivable, lent out to other countries. I know we do lend money to other countries because I keep hearing about us forgiving that debt whenever something happens, but those numbers are much harder to come by. If anyone knows where to find them, I'd really appreciate it if you could post a comment.
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