The top 1 percent of earners more than doubled their share of the nation’s income over the last three decades, the Congressional Budget Office said Tuesday, in a new report likely to figure prominently in the escalating political fight over how to revive the economy, create jobs and lower the federal debt. ...NYT
We're talking here about America starting with Reagan and ending during the penultimate year of the George W. Bush administration, as the financial crisis was about to hit America.
The Budget Office has come up with numbers that ought to shock the "top 1%" but may well get swept under their carpet with a less than embarrassed "we deserve it." But not by protesters, I bet.
- Top 1%: "average inflation-adjusted after-tax income grew by 275 percent"
- Top 20%: "average real after-tax household income grew by 65 percent"
- Three-fifths "in the middle Income scale": "growth in ... household income was just under 40 percent"
- Bottom fifth: "average real after-tax household income rose 18 percent"
In addition, the report said, government policy has become less redistributive since the late 1970s, doing less to reduce the concentration of income.
“The equalizing effect of federal taxes was smaller” in 2007 than in 1979, as “the composition of federal revenues shifted away from progressive income taxes to less-progressive payroll taxes,” the budget office said.
Also, it said, federal benefit payments are doing less to even out the distribution of income, as a growing share of benefits, like Social Security, goes to older Americans, regardless of their income. ...NYT
The study was requested by Democratic Senator Max Baucus and Republican Senator Charles Grassley.
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More fuel for the Occupy Wall Street protests: “The distribution of after-tax household income in the United States was substantially more unequal in 2007 than in 1979,” the Congressional Budget Office said Tuesday in a special report. Read the CBO’s analysis of income inequality. ...
... The CBO pointed to a variety of possible explanations for the increasing income inequality, such as “technical innovations that have changed the labor market for superstars (such as actors, athletes, and musicians), changes in the governance and structure of executive compensation, increases in firms’ size and complexity, and the increasing scale of financial-sector activities.”
Tax policy also played a role. The average tax rate declined and “the composition of federal revenues shifted away from progressive income taxes to less-progressive payroll taxes.”... WSJ Marketwatch
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Democrats in Congress have already called for higher taxes on the richest citizens: a new economic stimulus plan proposed by the White House would be paid for with a surtax on income above $1m under their plan. Republicans have objected to such policies as “class warfare” – but are trying to craft their own message in response to the mounting concerns about unequal income distribution.
In a speech on Wednesday, Paul Ryan, chairman of the House of Representatives budget committee, is expected to take up the issue, arguing that the Democratic approach was divisive and stifled upward mobility, according to one aide.
“Rather than raising taxes and making it more difficult for Americans to become wealthy, let’s lower the amount of government spending that the wealthy now receive,” Mr Ryan will tell an audience at the conservative Heritage Foundation, according to prepared excerpts.
The Wisconsin congressman – a leading spokesman for the Republican party on fiscal issues – will suggest means-testing of government health and pension programmes, as well as winding down what he labels “corporate welfare and crony capitalism” in the form of government subsidies. ...Financial Times
