Wages of top 1% rise much faster than bottom 90%
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Income growth for the top 1% of households has far outpaced that of all other households over the last two decades, bolstering the theory advanced by groups such as Occupy Wall Street that conditions are improving much more quickly for people outside the ‘99%.’
An economic snapshot from the Economic Policy Institute shows that inflation-adjusted incomes of the top 1% of households increased 224% from 1979 to 2007, while incomes for the bottom 90% grew just 5% in the same time period. Those in the top 0.1% of income fared even better, with incomes growing 390% over that time period.
The top 1% of households still fare well from President Bush-era tax cuts and from a decrease in the estate tax, according to the EPI. Its authors argue, in a separate paper, that in light of these rising incomes, high-income households should be taxed more to reduce the deficit.
The average tax rate for the top 1% of households has fallen since 1979, even as their incomes rose. High-income households paid a tax rate of about 37% in 1979 and about 29.5% in 2007.
Taxes are a hot topic these days in light of proposals by Republican presidential candidates to change the tax code. Herman Cain would scrap the current progressive income tax system and replace it with a 9% income tax, as well as a 9% sales tax and a 9% corporate tax.
-- Alana Semuels
Chart courtesy of EPI