Friday, June 25, 2010

Very rich becoming even richer

The sizes of income gaps between the very rich and everyone else in the United States have more than tripled in the last three decades. The result is that income concentration at the very top of the income scale is greater than at any time since 1928.

So says the Center on Budget and Policy Priorities (CBPP) in a report based on new data issued by the Congressional Budget Office (CBO) combined with prior research.

The authors, Arloc Sherman and Chad Stone, point out that the recession that began in December 2007 likely shank the gap between rich and poor households, but that a similar development during the 2001 recession turned out to be just a speed bump. Incomes at the top later more than made up lost ground.

The new CBO data show how middle-income Americans were affected by trends in after-tax income during the 1979 – 2007 period:

-- The share going to the top 1 percent hit its highest level (17.1 percent) while the share going to the middle one-fifth of Americans shrank to its lowest level (14.1 percent).

-- Average after-tax incomes for the top 1 percent rose by 281 percent after adjusting for inflation – an increase of $973,100 per household – compared to increases of 25 percent ($11,200 per household) for the middle fifth.

The CBO data, according to the CBPP report. are the most comprehensive data available on incomes and taxes for different income groups, capturing trends at the very top of the scale that the Census data miss. For example, Census income data do not include capital gains or earnings above $1,000,000. If someone makes $10,000,000 a year, the Census reports these earnings as $1,000,000.
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