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CBO Shows Income Gap Widens Further

Tuesday, October 25, 2011

Seemingly tailor-made for protesters, new statistics from the non-partisan Congressional Budget Office show after-tax income grew more for the top 1 percent than it has for anyone else since 1979.

This will not be surprising for most of the Occupy Wall Street movement, but the numbers show more than disproportionate and top-heavy income growth.

Sources of income are less evenly distributed than they were three decades ago; the income from investing has grown at a faster rate than the income from working.

Federal taxes are also less redistributive. than they were in the 1970s. The CBO finds that federal taxes and transfers had a greater "equalizing effect" back then. Low-income households also saw a greater share of transfer payments in 1979 than they do now.

Concurrent with these development has been an overall drop in the average federal tax rate. The CBO also notes that "the composition of federal revenues shifted away from progressive income taxes to less-progressive payroll taxes."

Numbers like these do little to assuage concerned protesters—they may in fact galvanize more. Look for Occupiers to tout the CBO's work:

 

→Income is growing for everyone, but it's growing several times faster for the top 1 percent than it is for anyone else.

CBO finds that, between 1979 and 2007, income grew by:

  • 275 percent for the top 1 percent of households,
  • 65 percent for the next 19 percent,
  • Just under 40 percent for the next 60 percent, and
  • 18 percent for the bottom 20 percent

→Income share, however, dropped for four-fifths of the population. It more than doubled for the top 1 percent.

The share of income going to higher-income households rose, while the share going to lower-income households fell.

  • The top fifth of the population saw a 10-percentage-point increase in their share of after-tax income.
  • Most of that growth went to the top 1 percent of the population
  • All other groups saw their shares decline by 2 to 3 percentage points

Read the full report here.

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Comments [1]

"We can either have democracy in this country or we can have great wealth concentrated in the hands of few, but we can't have both."

US Supreme Court Justice Louis Brandeis.

Oct. 26 2011 09:57 AM

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