It’s Official: The Rich are Getting Richer
The Congressional Budget Office has the data to prove it. Its new report finds that the after-tax income for the highest-income households grew more than it did for any other group. What does this have to do with kids and young people? A lot.
As Congress (and presidential candidates) debate ways to fix the economy and lower the deficit, family income and wealth – as well as the distribution of money across families and groups – is front and center. As the CBO numbers show, families in the middle and lower income brackets have not done as well as the richest families and individuals. That casts a new light on politicians’ calls for “shared sacrifice,” doesn’t it?
Some highlights from the report:
The Gap Has Widened: As a result of the uneven income growth, the distribution of after-tax household income in the United States was substantially more unequal in 2007 than in 1979. The share of income accruing to higher-income households increased, whereas the share accruing to other households declined. In fact, between 2005 and 2007, the after-tax income received by the 20 percent of the population with the highest income exceeded the aftertax income of the remaining 80 percent.
Government, Not Just Economy, Plays a Role: the CBO says the numbers and distribution are due to both the evolution of the nation’s economy and the tax and spending policies of the federal government and state and local governments, which had varying effects on households at different points in the income distribution.
The Role of Progressive Taxes: Because government transfers and federal taxes are both progressive, the distribution of after-transfer, after-federal-tax household income is more equal than is the distribution of market income.
Wages for the Rich Increased: "the composition of income for the 1 percent of the population with the highest income changed significantly from 1979 to 2007, as the shares from labor and business income increased and the shares of income represented by capital income decreased." In other words, the wealthiest are earning and keeping more, anot just getting more money from dividends or capital gains.
From the article: “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. In addition, the report said, government policy has become less redistributive since the late 1970s, doing less to reduce the concentration of income.”
For the full CBO report, click the link below.