How do people spend their share of American pie? In raw
dollars, expenditures of all types rise as income rises and as education
levels increase. But the percentage of total spending devoted to
different types of expenditures varies a good deal.
Higher income people enjoy larger cushions of unspent income, spend
smaller shares of income on food, clothing, shelter, health care, and
transportation, and spend larger shares on entertainment, cash
contributions, and insurance and retirement.
In much the same way, high school graduates earn sixty percent more than
those without a diploma. College graduates in turn earn almost ninety
percent more than high school graduates.
No matter one's income or education, everyone pays at least a little in taxes. Federal income taxes are mildly progressive, taking a slightly larger share of spending as incomes rise. State and local taxes are more nearly constant, reflecting the flat or regressive nature of sales taxes, excise taxes, and other major sources of state and local revenue.