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Income for the top 1% has soared over last three decades

October 26, 2011 |  2:41 pm

CBO Income growth chart
The rich have gotten richer over the last three decades -- and the very rich have gotten very richer -- far outpacing the middle class, according to a new government study.

The huge disparity in income growth significantly has widened the gap between the rich and the middle class, a key focus of protesters on Wall Street, in Los Angeles and elsewhere.

The top 1% of households saw their after-tax household income grow by 275% from 1979 to 2007, more than quadruple the growth of the rest of the top 20% of the population during that period, according to the study by nonpartisan Congressional Budget Office.

Meanwhile, income for the 60% of households that make up the middle of the income scale increased by slightly less than 40%, the study found. The poor -- the 20% of the population with the lowest income -- saw just an 18% increase.

"As a result of that uneven income growth, the distribution of after-tax household income in the United States was substantially more unequal in 2007 than in 1979," the report said.

The findings come as protesters have occupied parks near Wall Street, Los Angeles City Hall and around the country, decrying the growing pocketbooks and influence of what they have called "the 1%." The protesters have declared themselves to be "the 99%."

Overall, inflation-adjusted, after-tax income for the entire population rose 62% from 1979 to 2007.

The report said the exact cause of the rapid income growth for the richest Americans are not clear, but  researchers have speculated on some reasons: soaring salaries of superstar actors, athletes and musicians, more liberal executive compensation, and the growth of the financial sector.

At the same time, "the equalizing effect of federal taxes was smaller," the report said. The overall average federal tax rate fell slightly during the period because of income tax cuts, and the tax system became less progressive as more money was raised through payroll taxes.

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-- Jim Puzzanghera

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