If this viral video on wealth inequality in the U.S. wasn’t enough to convince you that something is very wrong with our economic system, then perhaps a new analysis of data that shows the disparity between income gains of the top 10 percent of taxpayers versus those of everyone else will.
According to Pulitzer Prize-winning journalist David Cay Johnston, who got his figures from an analysis of the latest IRS data by economists Emmanuel Saez and Thomas Piketty, income grew a jaw-dropping $59 on average for the bottom 90 percent of Americans between 1966 and 2011 (adjusting the income for inflation, of course). Income for the top 10 percent, on the other hand, rose from an average of $116,071 to $254,864.
To put that in perspective, Johnston says that if you were to plot the numbers on a chart, with $59 representing 1 inch, the line for the top 10 percent would go up more than 163 feet. If you compared the vast majority’s income growth with that of the top 1 percent, the line on the chart would extend 884 feet. And if you measured it against the top 1 percent of the top 1 percent, well ... that would require a really, really big chart, as the line would be nearly 5 miles long.
David Cay Johnston at Tax Analysts:
Those at the top are pulling away from everyone else not because of hard work, but the shift of income from labor to capital and changes in federal income, gift, and estate tax rules.
The median wage has been stuck since 1999 at a bit more than $500 per week in real terms and job growth has lagged far beyond population growth. But capital gains and dividends have soared, a new Congressional Research Service study shows. And, of course, the rich get most of that income.
...The Saez-Piketty analysis shows the concentration of growth at the very top increasing. That is bad for tax revenue and bad for social stability. The drop in incomes among the vast majority holds back economic growth, because there is just not enough aggregate demand to support creating enough new jobs to keep up with population growth.
And who was hit hardest by the new federal taxes that took effect this year? The vast majority.
(h/t Think Progress)
—Posted by Tracy Bloom.