America’s Rich Gets Richer: Top 1% Saw Income Grow 275%

By: EW News Desk Team   Date: 27 October 2011

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EW News Desk Team

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EconomyWatch, News Desk Team

 

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27 October 2011

America’s top 1 percent of households earned 275 percent more in 2007 than they did in 1997, while the poor only saw an 18 percent growth over the same period.

The latest study by the nonpartisan Congressional Budget Office reported that the income of America’s richest 1 percent grew 275 percent between 1979 and 2007, compared with a 65 percent gain for the top 20 percent, and an 18 percent gain for the bottom 20 percent.

Related: Infographic: Surprise, surprise: It’s good to be a financial CEO in the current economy

The CBO explained that federal policy has become less redistributive since the late 1970s, and that federal benefit payments are doing less to even out income distribution as a growing share of benefits such as Social Security are funneled to older Americans, regardless of their income.

"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.

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.

The findings come as protesters have occupied parks near Wall Street 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%."

Related: Wall Street blocked as demonstrators #OccupyWallSt

Republican Sander M. Levin said Wednesday that the report was "just the latest evidence of the alarming rise in income inequality in this country."

"This report confirms what the American people already know: The rules have been changed by the unfair tax policies of the last decade, and our tax code is doing less to level the playing field than it was in the past," he said.

Related: US poverty hits record high: 1 in 6 Americans living below poverty line

President Obama has proposed that the tax code be changed so people earning more than $1 million a year pay at least the same tax rate as middle-class earners. He called the principle the "Buffett Rule," after billionaire Warren Buffett, who has complained that he pays a lower tax rate than anyone in his office at Berkshire Hathaway Inc.

Related: Warren Buffett: I want to pay more taxes!


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