I have written several Blogs that deal with the growing disparity between the Haves and the rest of America. Below is a study that documents that is just what has been taking place under the Bush tax and economic policies:
March 28, 2007, 10:20PM
U.S. income gap growing wider
The rich are getting richer while the poor have lost some ground, recent tax data show
By DAVID CAY JOHNSTON
New York Times
TAXING TIMES
The Center on Budget and Policy Priorities will release a report today showing that for middle-income Americans, the share of income taken by federal taxes has been mostly unchanged for four decades. By comparison, it has fallen by half for those at the very top of the ladder.
Income inequality grew significantly in 2005, with the top 1 percent of Americans — those with incomes that year of more than $348,000 — receiving their largest share of national income since 1928, analysis of newly released tax data shows.The top 10 percent, roughly those earning more than $100,000, also reached a level of income share not seen since before the Depression.
The gains went largely to the top 1 percent, whose incomes rose to an average of more than $1.1 million each, an increaWhile total reported income in the United States increased almost 9 percent in 2005, the most recent year for which such data are available, average incomes for those in the bottom 90 percent dipped slightly compared with the year before, dropping $172, or 0.6 percent.
se of more than $139,000.
The new data also show that the top 300,000 Americans enjoyed almost as much income as the bottom 150 million Americans. Per person, the top group received 440 times as much as the average person in the bottom half earned, nearly doubling the gap from 1980.
Emmanuel Saez, a University of California at Berkeley economist who analyzed the Internal Revenue Service data with Thomas Piketty of the Paris School of Economics, said such growing disparities were significant in terms of social and political stability.
"If the economy is growing but only a few are enjoying the benefits, it goes to our sense of fairness," Saez said. "It can have important political consequences."
Last year, according to other data, incomes for average Americans increased for the first time in several years. But because those at the top rely heavily on the stock market and business profits for their income, both of which were strong last year, it is likely that the disparities in 2005 are the same or larger now, Saez said.
He noted that the analysis was based on preliminary data and that the highest-income Americans were more likely than others to file their returns late, so his data might understate the growth in inequality.
The disparities may be even greater for another reason. The Internal Revenue Service estimates that it is able to accurately tax 99 percent of wage income but that it captures only about 70 percent of business and investment income, most of which flows to upper-income individuals.
The Bush administration argued that its tax policies, despite cuts that benefited those at the top more than others, had "made the tax code more progressive, not less." Brookly McLaughlin, the chief Treasury Department spokeswoman, said that this year "the share of income taxes paid by lower-income taxpayers will be lower than it would have been without the tax relief, while the share of income taxes for higher-income taxpayers will be higher."
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Treasury Secretary Henry Paulson Jr. has acknowledged that income disparities have increased, but attributed that shift largely to "the rapid pace of technological change."
Robert Greenstein, executive director of the Center on Budget and Policy Priorities, said that the equation should take into account cuts in fringe benefits to workers and in government services that middle-class and poor Americans rely on more than the affluent.