The rich are indeed getting richer -- by leaps and bounds when compared to the rest of the population. Between 1979 and 2007, the wealthiest 1 percent of Americans saw their after-tax income nearly triple, while the 60 percent of the population that largely makes up the middle class saw an increase of just under 40 percent.
The Congressional Budget Office measured after-tax income (income after federal taxes, Social Security and unemployment insurance) of Americans and concluded that federal government policies since 1979 are less effective in evenly distributing income through taxes. It also concluded that federal benefit programs such as Social Security contribute to the income gap by providing income to all older Americans regardless of their wealth.
Here is the report's breakdown on how much income increased for Americans from 1979 to 2007:
- 275 percent for the top 1 percent of households,
- 65 percent for the next 19 percent,
- Just under 40 percent for the next 60 percent, and
- 18 percent for the bottom 20 percent.
While income from labor decreased over the past three decades, income from capital gains and business, which generally favor the wealthy, increased.
The data will no doubt add fuel to the Occupy Wall Street movement whose goal is to call attention to the nation's wealth gap, but it also will open up arguments about the role and responsibility of the federal government in evening out income through taxes and benefit programs. As Congress seeks ways to reduce unemployment and possibly reform the tax structure to lower the federal deficit, this report will provide key findings for debate.
How do you feel about the income gap?
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