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Tuesday, January 28, 2014

Official Statistics on Inequality, the Top 1%, and Redistribution

Tax Foundation logoTax Foundation, Official Statistics on Inequality, the Top 1%, and Redistribution:

President Obama will reportedly focus much of his State of the Union speech on addressing inequality and mobility in America. Undoubtedly, these issues will generate a considerable amount of rhetoric by pundits and politicians on both sides of the aisle in the days ahead. Much of this rhetoric will not be supported by data or facts.

In order to bolster this discussion with data, we’ve summarized some of the recent work done on inequality and mobility by the Congressional Budget Office and the IRS. Links are provided to the original source material.

Inequality: CBO data shows that inequality today is slightly higher than the average of the past thirty years, but less that it was during the last two years of the Clinton administration.

 

Progressivity:  According to the CBO’s progressivity index, the federal tax code is as progressive today as it has been at any time during the past thirty years.

 

The Top 1%:  The Top 1% continues to pay a larger share of the federal income tax burden than the bottom 90 percent combined.

 

Redistribution:  Using 2006 data, CBO found that tax and spending policies combined to redistribute $1.2 trillion in income from the top 40 percent of non-elderly households to the bottom 60 percent of non-elderly households.

 

Mobility:  IRS panel data that tracked the same group of taxpayers between 1999 and 2007 showed that Americans can move from one economic group to another fairly quickly.

More than 50% of Taxpayers Moved Out of the Bottom Quintile Between 1999 & 2007

1999 Income Quintile/Percentile

2007 Income Quintile/Percentile

Lowest

Second

Third

Fourth

Fifth

Total

Lowest

42.5%

25.1%

16.3%

10.4%

5.7%

100.0%

Second

32.2%

34.7%

17.3%

10.8%

5.0%

100.0%

Third

14.4%

26.0%

32.8%

17.8%

8.9%

100.0%

Fourth

7.7%

10.7%

25.7%

37.7%

18.3%

100.0%

Fifth

3.1%

3.8%

7.5%

23.3%

62.3%

100.0%

Tax Foundation calculations based on IRS data from the 1999-2007 SOI Individual Tax Panel.

http://taxprof.typepad.com/taxprof_blog/2014/01/official-statistics.html

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Comments

And when we add in federal payroll taxes, which account for more than one third of federal revenue, we see that the federal tax system as a whole is not very progressive.

Posted by: Anon | Jan 28, 2014 4:28:41 PM

Total hackery and lying with stats ... gains in the last 30 years have gone to the top 0.1%. A Gini coefficient that only looks at quintiles won't fully pick that up. Further, the 08/09 crash impacted the very top more because they own most of the wealth ... but of course they came roaring back in 2011/12/13 ... which isn't included in the data above.
Despite all that desperate sandbagging by the tax foundation that we still see a 20% increase in the Gini coefficient.

Posted by: TH | Jan 28, 2014 7:25:36 PM