Top 1% Leaving Others in the Dust

June 25, 2010 at 2:27 pm

After-tax incomes nearly quadrupled for the top 1 percent of Americans in the last three decades, while barely rising among middle- and lower-income households, according to new data from the Congressional Budget Office. Here’s how different income groups did over that period:

The new CBO data — the most comprehensive numbers available on income inequality — only go through 2007, so they don’t show the impact of the recession and the stock market plunge. These events may have reduced inequality somewhat by shrinking incomes the most at the top, as the bursting of the dot.com bubble did a decade ago. But as the chart shows, that turned out to be just a speed bump for the top 1 percent, whose after-tax incomes soon resumed their climb.

I’ll discuss some other findings from the CBO data in a post next week.

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More About Arloc Sherman

Arloc Sherman

Sherman is a Senior Researcher focusing on family income trends, income support policies, and the causes and consequences of poverty.

Full bio | Blog Archive | Research archive at CBPP.org

4 Comments Add Yours ↓

Comments are listed in reverse chronological order.

  1. Joanne Basta #
    1

    I am curious to know if a state level analysis can be done of these CBO data and if it would be of any value for policy making. For instance, are these wealthy people concentrated in certain areas of the country? In what states do they actually pay taxes?

  2. Thomas A. Robinson #
    2

    I wondered what ever happened to the deep pocket theories I learned in law school that stood for having the rich and affluent paying the cost which the low and middle income people couldn’t pay. I guess its that they want to move some of that money to their side of the table becuase they’ve become the easy targets and its causing great personal suffering and hardship.

  3. Lee Farris #
    3

    This is an important graph for people to see.

    You note that the numbers do not show the impact of the recession. Ed Wolff has looked at WEALTH inequality and found that inequality GREW during this recession, unlike others:

    http://blogs.wsj.com/wealth/2010/04/30/top-1-increased-their-share-of-wealth-in-financial-crisis/
    “But what some are calling the Great Recession is proving to be different. New calculations by Edward Wolff, the New York University economist and an expert on U.S. wealth statistics, show that the top 1% actually held onto its share of national wealth in the crisis, and may have even gained a bit.

    According to his analysis, the top 1% held 34.6% of all national wealth in 2007. By Dec. 31, 2009, they held 35.6%.

    Meanwhile, share of national wealth held by the bottom 90% fell to 25% from 27%.

    The reason is that the wealthy benefited disproportionately from the rebound in financial markets. Their wealth generally is mostly in stocks and businesses, the values of which have surged since the depths of the crisis.

    Real estate, which accounts for the bulk of household wealth for the nonrich, hasn’t recovered. From 2007 through the end of 2009, owner-occupied homes fell 26% in value, while other real estate also fell 26%. Yet stocks fell only 24%, while other financial securities shed 14%.

    The rich, in other words, suffered a smaller percentage decline than did the bottom 90%.”

  4. jack Underhill #
    4

    I have a lot of data on the subject in my paper “An integrated Approach to Reducing Poverty and equality” which I presented at a conference of the American society of public administration in San Jose in April. If so I can e-mail a copy. I could use a critique. I use organization heavily in my research. I am retired federal employee.

    Jack Underhill, PhD



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