CBO Study: Income Inequality in America

Posted by AzBlueMeanie:

You may have seen this story in your local newspaper today Rich are getting much richer:

The richest 1 percent of Americans have been getting far richer over the past three decades while the middle class and poor have seen their after-tax household income only crawl up in comparison, according to a government study.

After-tax income for the top 1 percent of U.S. households almost tripled, up 275 percent, from 1979 to 2007, the Congressional Budget Office found. For people in the middle of the economic scale, after-tax income grew by just 40 percent. Those at the bottom experienced an 18 percent increase.

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"The distribution of after-tax income in the United States was substantially more unequal in 2007 than in 1979," CBO Director Doug Elmendorf said in a blog post. "The share of income accruing to higher-income households increased, whereas the share accruing to other households declined."

The top 1 percent made $165,000 or more in 1979; that jumped to $347,000 in 2007, the study said. The income for the top fifth started at $51,289 in 1979 and rose to $70,578 in 2007. On the other end of the spectrum, those in the 20th percentile went from $12,823 in 1979 to $14,851 in 2007.

The report also found:

- The top 20 percent of the population earned 53 percent of after-tax income in 2007, as opposed to 43 percent in 1979.

- The top 1 percent reaped a 17 percent share of all income, up from 8 percent in 1979.

- The bottom 20 percent reaped just 5 percent of after-tax income, vs. 7 percent in 1979.

Jon Perr provides the details the news media tends to leave out. PERRspectives: GOP Candidates Double Down on Record Income Inequality:

This week, the Congressional Budget Office (CBO) provided just the latest analysis confirming that U.S. income inequality is at record levels. But while the income gap is at largest in 80 years even as the total federal tax burden is at its smallest in 60, the 2012 Republican presidential field is proposing to make both much, much worse. As the numbers show, the GOP field's toxic mix of massive upper-class tax cuts, mountains of debt and draconian spending cuts would ensure the yawning chasm between the top 1% and everyone else grows wider still.

Rick Perry, Mitt Romney, Newt Gingrich, Herman Cain, Jon Huntsman and Ron Paul would all slash the top income tax rate starting in 2013. Each would reduce corporate taxes, already down to their lowest percentage share of federal revenue since 1950, from 35% to as little as 9%. All would eliminate the estate tax, a $25 billion a year windfall to the richest families in America, only a quarter of one percent of whom now pay it. All but Romney would completely zero out the capital gains tax. (As the Washington Post recently explained the impact of the already historically low 15% capital gains tax rate, "Over the past 20 years, more than 80 percent of the capital gains income realized in the United States has gone to 5 percent of the people; about half of all the capital gains have gone to the wealthiest 0.1 percent.")

Regardless of which Republican emerges as the party's standard bearer in 2012, the result as John Harwood explained on CNBC, is that the richest Americans would get back "hundreds of thousands, maybe even millions of dollars" annually from the U.S. Treasury.

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It's also no wonder that on the same day the CBO reported that "top earners doubled share of nation's income," a new CBS/New York Times poll found:

"Two-thirds of the public said that wealth should be distributed more evenly in the country. Seven in 10 Americans think the policies of Congressional Republicans favor the rich. Two-thirds object to tax cuts for corporations and a similar number prefer increasing income taxes on millionaires."

Americans have heard the Republican story before. And no matter how Mitt Romney, Herman Cain, Rick Perry or any other of the GOP White House hopefuls tell it, the ending is always the same:

Just say no to faith based supply-side "trickle down" GOP economics.