Taxes & Spending

Living It Up in Loudon County

When the Census Bureau recently named the nation’s richest county, it was not New York County, N.Y., home to Wall Street, or Santa Clara County, Calif., the heart of Silicon Valley.

No, it was Loudon County, Va. — final resting place for many of your tax dollars.

No matter what else people may do for a living in Loudon — a suburb of Washington, D.C. — it is unmistakably one of those places where federal employees and federal contractors (and people who lobby federal employees for federal contractors) go to sleep for the night.

As rich as Loudon is compared to the rest of the country, its relative wealth is not conspicuous in suburban Washington. In fact, the suburbs around our nation’s Capital now boast an astounding concentration of highly paid people.

A study of “income, earnings and poverty” in the U.S. released last month by the Census Bureau’s American Community Survey, includes two lists of U.S. counties with the highest median household incomes for 2005. One cites the 10 richest counties with populations greater than 250,000; the other, the 10 richest counties with populations between 65,000 and 250,000. Of the 20 counties on the two lists, eight were within commuting distance of D.C. All boasted median household incomes far above the national median of $46,242. (Household income includes the money earned by all persons 15 or older living in the same household.)

Loudon topped the larger counties with a median household income of $98,483 — more than twice the national median. Fairfax County, Va., placed second at $94,610. Howard County, Md., placed third at $91,184. Montgomery County, Md., placed sixth at $82,187. And Prince William County, Va., placed seventh at $81,904.

Suburban Washington jurisdictions listed among the richest smaller counties included: Calvert County, Md., which placed third at $84,388; Arlington County, Va., which placed sixth at $80,433; and Stafford County, Va., which placed 9th at $78,675.

Why are the Washington suburbs so wealthy? The Census Bureau study did not directly answer that question. But a report in the Washington Post cited local economists who said it “is a side effect of the enormous flow of federal money into the region through contracts for defense and homeland security work in the five years since the September 11, 2001, attacks, coming after the local technology boom of the 1990s.”

But this answer is too narrow. In 2006, according to the Office of Management and Budget, the federal government will spend more than three times as much on its “human resources” functions ($1.7 trillion) as it will on “national defense” functions ($535.9 billion). As defined by OMB, “human resources” spending includes such things as education, training, employment, social services and health programs, as well as Medicare and Social Security.

If it is reasonable to assume that many of the relatively wealthy Americans who live in suburban Washington are slopping at the trough of federal defense spending, it is also reasonable to assume many are slopping at the trough of non-defense spending. After all, there’s more slop in that trough.

While it did not directly answer the question, the Census study did provide some evidence of why so many people are so well paid in Washington’s suburbs. You see, you don’t have to be a federal contractor or lobbyist to make a lot of money off the taxpayers. You can work for the government itself.

The Census Bureau calculated the median earnings of self-employed owners of their own businesses, as well as the median earnings of employees of private companies, non-profit organizations, and state, local and federal governments. Only male self-employed owners of their own incorporated businesses had higher median earnings ($58,468) than either male ($54,054) or female ($46,849) federal employees. Male employees of private companies, whose median earnings were $41,038, lagged behind male employees of non-profits ($42,875), state governments (45,698), local governments ($45,788), and the federal government ($54,054). The median earnings of women working for the federal government ($46,849) exceeded by more than $16,000 the median income of women working for private companies ($30,824).

Indeed, if a husband and wife both worked for the federal government and both earned the median income for federal government workers of their gender, their household income would be $100,903. That would put them above the median household income even in the nation’s wealthiest counties — that is, even in suburban Washington.

The next time a liberal tells you cutting taxes is a break for the rich, tell them they have it backwards. The taxes we pay go to the rich — in places like Loudon County.

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