[syndicate] Income Gap Is Widening, Data Shows (fwd)

[Alan Sondheim]

heart of fucking empire

---------- Forwarded message ----------
Date: Fri, 30 Mar 2007 01:12:05 -0400
From: Alan Sondheim <sondheim at PANIX.COM>
Reply-To: Theory and Writing <WRYTING-L at LISTSERV.WVU.EDU>
To: WRYTING-L at LISTSERV.WVU.EDU
Subject: Income Gap Is Widening, Data Shows (fwd)

---------- Forwarded message ----------
Date: Thu, 29 Mar 2007 22:00:29 -0400
From: moderator at PORTSIDE.ORG
To: PORTSIDE at LISTS.PORTSIDE.ORG
Subject: Income Gap Is Widening, Data Shows

Income Gap Is Widening, Data Shows

By DAVID CAY JOHNSTON

March 29, 2007, The New York Times

http://www.nytimes.com/2007/03/29/business/29tax.html?ei=5065&en=f30aed8087a73065&ex=1175745600&partner=MYWAY&pagewanted=print

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.

While total reported income in the United States increased
almost 9 percent in 2005, the most recent year for which such
data is available, average incomes for those in the bottom 90
percent dipped slightly compared with the year before,
dropping $172, or 0.6 percent.

The gains went largely to the top 1 percent, whose incomes
rose to an average of more than $1.1 million each, an increase
of more than $139,000, or about 14 percent.

The new data also shows that the top 300,000 Americans
collectively 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.

Prof. Emmanuel Saez, the University of California, Berkeley,
economist who analyzed the Internal Revenue Service data with
Prof. 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,' Professor Saez
said. 'It can have important political consequences.'

Last year, according to data from other sources, 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, Professor 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, because not
everybody accurately reports such figures.

The Bush administration argued that its tax policies, despite
cuts that benefited those at the top more than others, had not
added to the widening gap but '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.'

Treasury Secretary Henry M. Paulson Jr., she noted, has
acknowledged that income disparities have increased, but,
along with a 'solid consensus' of experts, attributed that
shift largely to 'the rapid pace of technological change has
been a major driver in the decades-long widening of the income
gap in the United States."

Others argued that public policies had played a role in the
shift. Robert Greenstein, executive director of the Center on
Budget and Policy Priorities, an advocacy group for the poor,
said that the data understates the widening disparity between
the top 1 percent and the rest of the country.

He said that in addition to rising incomes and reduced taxes,
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. These include
health care, child care and education spending.

'The nation faces some very tough choices in coming years,' he
said. 'That such a large share of the income gains are going
to the very top, at a minimum, raises serious questions about
continuing to provide tax cuts averaging over $150,000 a year
to people making more than a million dollars a year, while
saying we do not have enough money' to provide health
insurance to 47 million Americans and cutting education
benefits.

A major issue likely to be debated in Congress in the year
ahead is whether reversing the Bush tax cuts would slow
investment and, if so, how much that would cost the economy.

Mr. Greenstein's organization will release a report today
showing that for Americans in the middle, the share of income
taken by federal taxes has been essentially unchanged across
four decades. By comparison, it has fallen by half for those
at the very top of the income ladder.

Because the incomes of those at the top have grown so much
more than those below them, their share of total income tax
revenue has risen despite the reduced rates.

The analysis by the two professors showed that the top 10
percent of Americans collected 48.5 percent of all reported
income in 2005.

That is an increase of more than 2 percentage points over the
previous year and up from roughly 33 percent in the late
1970s. The peak for this group was 49.3 percent in 1928.

The top 1 percent received 21.8 percent of all reported income
in 2005, up significantly from 19.8 percent the year before
and more than double their share of income in 1980. The peak
was in 1928, when the top 1 percent reported 23.9 percent of
all income.

The top tenth of a percent and top one-hundredth of a percent
recorded even bigger gains in 2005 over the previous year.
Their incomes soared by about a fifth in one year, largely
because of the rising stock market and increased business
profits.

The top tenth of a percent reported an average income of $5.6
million, up $908,000, while the top one-hundredth of a percent
had an average income of $25.7 million, up nearly $4.4 million
in one year.




_____________________________________________

Portside aims to provide material of interest
to people on the left that will help them to
interpret the world and to change it.

Submit via email: moderator at portside.org
Submit via the Web: portside.org/submit
Frequently asked questions: portside.org/faq
Subscribe: portside.org/subscribe
Unsubscribe: portside.org/unsubscribe
Account assistance: portside.org/contact
Search the archives: portside.org/archive