Data provided by the Census Bureau shows that real median income after taxes fell even more (8.8%) to $64,240. On the other hand, the after-tax poverty rate increased to 12.4%, reflecting a 59% rise.
The drop is due to "key changes in federal tax policy"
According to the agency, the "dramatic" drop in revenue "can be attributed to key changes in federal tax policy." Among the changes are the expiration of several public assistance programs including: the "expansion of the Earned Income Tax Credit (EITC) for taxpayers without children and the full refund of the Child Tax Credit (CTC) and the Tax for the Care of Children and Dependents. Credit (CDCTC)."
Another possible reason for the decline is that "most households also received Economic Impact Payments (EIPs) that were no longer issued in 2022,” per the Census Bureau.
"The reversal of these tax policies had the greatest effect on after-tax income among the nation's lowest-income households," the report said.
Poverty on the rise
The report also notes that the number of people living in poverty increased significantly last year. In 2021, due to refundable tax credits, 9.6 million people were able to stay above the poverty line. Due to the ineffectiveness of such programs a year later, that figure decreased in 2022 to 6.4 million.
The office explained the increase in poverty using the same reasons with which they argued the decrease in income: public aid, but this time, they added aid and "extensions due to the pandemic."
Among the most affected age groups were children. Last year, 3.5 million children were kept out of poverty by aid programs, compared to 4.9 million children in 2021.
Office data reflected in consumer opinion
The bureau's data is represented in a survey conducted by the Federal Reserve of New York that revealed that 41% of American households said they were experiencing a worse economic situation than at the same time last year.
The survey — called Consumer Expectations — also found that nearly 30% of respondents expect their finances to be in worse shape next year:
Households' perceptions of their current financial situation and expectations for the future deteriorated.
Biden touts his economy and responds to census data
In response to the census data, the White House released a statement in which Biden blamed Republicans for the worsening economy. He argued that the report's findings are due to "corporate tax cuts" made by GOP congressmen.
However, in citizens’ opinion, the president and his administration are responsible for the nation’s declining economy. A survey by The Wall Street Journal consulted 1,500 registered voters and found that 59% of respondents disapprove of the president's economic performance, compared to 37% who viewed it positively.
Despite all the indicators that reflect that the economy is worsening, President Joe Biden has reiterated throughout his term that his policies are strong and effective, going so far as to coin the term "Bidenomics." On Labor Day, the President promoted his agenda to voters and said that America’s economy is the "strongest in the world."