Americans spent more on taxes than food and clothes in 2016, is the main point conservative media outlets are taking away from the Bureau of Labor Statistics recently released report on Consumer Expenditures for 2016.
Because we are entering a season of debate on tax reform, this is an obvious angle to take on such data. But focusing only on the taxes can obscure the good news: the average American household spends a relatively small percentage of its income on food.
The average “consumer unit” (i.e., families, single persons living alone or sharing a household with others but who are financially independent, or two or more persons living together who share expenses) in 2016 had a before tax income of $74,664 and an after tax income of $64,175. The average food expenditure was $7,203, with 44 percent of that ($3,154) being food eaten away from home.
That means the average consumer unit spends 9.6 percent of before-tax income or 11.2 percent of our after-tax income on food.
But even that number obscures how the much we really need to spend on food because the “food eaten away from home” category includes, according to the Bureau of Labor Statistics’s glossary,
all meals (breakfast and brunch, lunch, dinner and snacks and nonalcoholic beverages) including tips at fast food, take-out, delivery, concession stands, buffet and cafeteria, at full-service restaurants, and at vending machines and mobile vendors. Also included are board (including at school), meals as pay, special catered affairs, such as weddings, bar mitzvahs, and confirmations, school lunches, and meals away from home on trips.
How much less would our food expenditures be if we excluded tips at restaurants or the $5.75 hot dog at Wrigley Field or the $1,214 (avg. cost) to cater a wedding?
It’s easy for those of us born after the 1960 to take for granted just how cheap (relative to our income) food has become in recent decades. In 1933, Americans spent 25.2 percent of their disposable personal income on all food purchases, and from 1945 to 1955 that rate stayed above 20 percent. The ratio only dropped below 12 percent in 1990 and has not risen above that since.
Imagine having to earn 10 percent more income just to provide the same amount of food for your family. And that’s just relative to what many consider the “golden age” (the 1950s and 1960s) for the American worker. When we consider how cheap our food is relative to other countries the figure is even more amazing. For example, we spend more annually on dairy products ($410) than the average worker in Madagascar earns in a year ($400).
So while it may be worth pointing out that we pay more in taxes than we do on food, we should remember—and be thankful—that the primary reason is because food has become so affordable.
Besides, if we want to lower taxes, all it takes is the will of the people to vote for such change. We can’t vote our way lower food prices, though. For that, we need the God-given miracles of markets and human ingenuity.