Captain Obvious Announcement: The Rich Get Richer

Updated numbers show that in America the very wealthy got very wealthier during the last decade:

The Center on Budget and Policy Priorities released a report over the weekend showing that the gaps in after-tax income between the richest 1 percent of Americans and the middle and poorest fifths of the country more than tripled between 1979 and 2007. The CBPP concluded that the data suggests greater income concentration at the top of the income scale than at any time since 1928.

Check out the chart here for a little visual of what they're talking about.

Later on they point out that the numbers only cover up to 2007 so the Great Recession probably knocked the super wealthy down a peg, but I seriously doubt it put much more than a dent in the disparity.

One of the common arguments I hear about taxes, especially when the topic is progressive tax structures (i.e. higher tax rates on the wealthy) is that the wealthy pay more in tax dollars than the rest of us.  I find that argument pretty lame because in my mind the most important number is the net, not the gross, and as you can see from the numbers above the net income of the super wealthy, that is their income after taxes, has grown at a much higher rate than everyone else.  That means that even if they are paying a higher tax rate, and that's a big if (see this for a look at how the effective tax rate on the super wealthy is less than you'd think), their real net income gains have still far outpaced those of us who live here below the income stratosphere.  As your average middle classer I find that troubling.

Countdown to someone calling me a socialist: 10, 9, 8, 7…

1 thought on “Captain Obvious Announcement: The Rich Get Richer

  1. Sam Pizzigati

    Great post!
    In the past, the Congressional Budget Office, the source of the CBPP numbers, has broken the top 1 percent down into even smaller — and richer — fractions. But the best data on the richest of the rich still come from the IRS.
    In 2007, the latest year with IRS stats available, America’s 400 highest-earning taxpayers collected an average $344.8 million each in income. They paid 16.6 percent of that, after exploiting all the loopholes they could find, in federal income taxes.
    In 1955, by contrast, the top 400 collected on average, in 2007 inflation-adjusted dollars, just $12.8 million. They paid, after exploiting all available loopholes, 51.2 percent of that in taxes.

    Reply

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