Gap Between U.S. Rich, Poor Rises Sharply

The gap between rich and poor widened so much in the 1980s that the richest 1% receive nearly as much of Americans’ total income after taxes as do the bottom 40%, a liberal research group said today.

The bottom 40% will receive 14.2% of total after-tax income received by all groups this year, while the top 1% will receive 12.6%, the Center on Budget and Policy Priorities said.

“This marks a sharp change from 1980, when the top 1% received half as much after-tax income as the bottom 40%,” according to the report, which was based on an analysis of Congressional Budget Office data on income and taxes.

The share of income going to those Americans in the middle of the income scale is lower than at any time since the end of World War II, the center said.

The report also said the richest 2.5 million people have nearly as much total income as the 100 million Americans with the lowest incomes.

Robert Greenstein, executive director of the center, said the changes were due in part to increased income from capital gains received by the wealthy. The findings, he said, were an argument against President Bush’s call for a cut in the tax on capital gains.

“Since the vast bulk of capital gains income goes to the very wealthy, they would receive most of the benefits from a reduction in taxes on capital gains,” Greenstein said.

Bush and other advocates of cutting the capital-gains tax say it would provide an added incentive for people to invest in job-creating new and expanded businesses.

The report said the most affluent Americans received large income gains during the ‘80s, while middle-income people gained little and the poor fell behind.