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Tuesday, March 26, 2013

Speaking of Inequality (with correction)

Travis Waldron at Think Progress pointed out this excellent article by David Cay Johnston. It dovetails well with my last post, which showed the fall of individual real wages and their failure to regain their peak fully 40 years after it was reached.

Johnston writes:
Incomes and tax revenues have grown from 2009 to 2011 as the economy recovered, but an astonishing 149 percent of the increased income went to the top 10 percent of earners.
If you wonder how that can happen, the answer is simple: Incomes fell for the bottom 90 percent.
While this data is at the level of tax filing households, it is consistent with what we see at the level of the individual. More nuggets from Johnston:

From 1966 to 2011, adjusted gross income in the bottom 90% grew a total $59 (2011 dollars, not the 1982-84 dollars I used in my last post) in 45 years, from $30,378 to $30,437.

"Candidate Bush said his tax cuts would make everyone prosper. But the real average pretax income of the bottom 90 percent in 2011 was $5,340 less than in 2000, a decline of more than $100 per week, or 15 percent, in pretax income."

The income share of the bottom 90% fell from 66.3% to 51.8% over the 1966-2011 period.


So we have seen inequality increase in pretax income plus changes in tax policy that have reduced the effective tax rates on corporations and capital gains, income which goes overwhelmingly to the rich. Thus, post-tax inequality is even worse than pretax inequality.

Johnston's report builds on the work of economists Emmanuel Saez and Thomas Piketty. Together with Facundo Alvaredo and Tony Atkinson, they have created the World Top Incomes Databases, very much worth checking out for a comparative look at U.S. inequality.

Correction: I initially saw Johnston's article linked from Think Progress, not Daily Kos, as I realized almost immediately after I hit the "publish" button. Apologies to Travis Waldron.

1 comment:

  1. has anyone ever plotted fraction of workers in suburbs/office parks vs something like real wage growth or inequlity:
    ithink the move from cities, served by mass transit (NY, PHIL, etc) to suburbs is part of the deterioration of the middle class since the 70s; certainly the cost of automobiles is huge

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