Saturday, November 19, 2011

the reagan revolution in CBO numbers :

"between 1979 and 2007, income grew by:
  • 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.

homepage graphic'


The share of income going to higher-income households rose, while the share going to lower-income households fell.
  • The top fifth of the population saw a 10-percentage-point increase in their share of after-tax income.
  • Most of that growth went to the top 1 percent of the population.
  • All other groups saw their shares decline by 2 to 3 percentage points.

Market Income Shifted Toward Higher-Income Households

Shifts in the distribution of market income underlie most of the changes in the distribution of after-tax income. (Market income—or income before taxes and transfers—includes labor income, business income, capital income, capital gains, and income from other sources such as pensions.)
  • Each source of market income was less evenly distributed in 2007 than in 1979.


  • More concentrated sources of income (such as business income and capital gains) grew faster
  •  than less concentrated sources
      (such as labor income).





Government Transfers and Federal Taxes Became Less Redistributive

Government transfers and federal taxes both help to even out the income distribution. Transfers boost income the most for lower-income households, while taxes claim a larger share of income as people's income rises.
In 2007, federal taxes and transfers reduced the dispersion of income by 20 percent, but that equalizing effect was larger in 1979.
  • The share of transfer payments to the lowest-income households declined.
  • The overall average federal tax rate fell."

In the early years of the
period, market income concentration increased almost
exclusively as a result of an increasing concentration of
separate income sources. The increased concentration of
labor income alone accounted for more than 90 percent
of the increase in the concentration of market income
in those years. In the middle years of the period, an
increase in the concentration within each income source
accounted for about one-half of the overall increase in
market income concentration; a shift to moreconcentrated
sources explains the other half. In the later
years, an increase in the share of total income from more
highly concentrated sources, in this case capital gains,
accounted for about four-fifths of the total increase in
concentration. Over the 1979–2007 period as a whole,
an increasing concentration of each source of market
income was the more significant factor, accounting
for four-fifths of the increase in market income
concentration."

"Between 1979 and 2007, the
share of income coming from capital gains and business
income increased, while the share coming from labor
income and capital income decreased."