CBPP on Income Concentration

The Center on Budget and Policy Priorities has another interesting report today on income inequality in the United States.  See Aviva Aron-Dine, New Data Show Income Concentration Rose Again in 2006 (Mar. 27, 2008).  The report is based on the work of Thomas Piketty and Emmanuel Saez, who issued an updated version of their research on income inequality, based on new information from the IRS.  There are a couple of excellent graphs as well, worth looking at.  Key points include:

• 2006 was the fourth straight year of significant income gains at the very top and very small gains everywhere else:  from 2002-2006, the top 1% had average incomes rise by 44% or $335,0000.  The bottom 90% had incomes rise by 3%, or $1000.
• The share of the nation's income going to the top 1% hasn't been that high since just before the Great Depression.
• Those in the very top income distribution--the top one-tenth of 1 percent--had enormous income gains rising 60%, or $1.9 million per household, since 2002.
• The three decades of booming economic growth after WWII lifted everybody's boats--the incomes of the bottom 90% actually increased more rapidly, on average, than the incomes of the top 1 percent.
• But the three decades since then (from the mid seventies on) have seen the incomes of most Americans increase only a little, while the incomes of the top 1 percent have "soared"

Comments

[J]

One thing I have never fully understood is how I hear things like this from so many academics, but then I hear a whole other story from other academics - stating that the disparity in wealth amongst classes in the U.S. is really not that bad. I often feel like there is simply a maelstrom of information on all the hot button issues - global warming, universal health care, immigration, flat taxes, estate tax, etc. It's pretty annoying for anyone trying to make informed decisions.

[LindaMBeale]

J: I understand your concern. Trouble is, facts can be used selectively and often are, especially by those who want to push a particular ideological position. One of the things that has been very frustrating to those fighting to retain a decent estate tax that does the work it needs to do is that the proponents of estate tax evisceration have been exceedingly well funded and have continued to perpetuate myths even when the myths have been soundly disproven--such as the idea that lots of family farmers lose their farms because of the federal estate tax. Outright wrong, but even when it has been directly pointed out to them, they keep putting it in their literature. They repeat it, and it is taken as truth and repeated in the news media--especially since the news media is mostly owned by big-business-friendly giants and wealthy families that stand to benefit from estate tax "reform". So everyone needs to look carefully at the credentials of the sources of the information. I have found both CBPP and economists Piketty and Saez to be very creditworthy.