Thursday, April 29, 2010

Income moves upward, gap grows

Where has all the income gone? Look up.

March 3, 2010
By Lawrence Mishel

The 400 American households with the highest incomes also have enjoyed a much faster pace of income growth than the vast majority. And, because tax rates applied to their income have fallen by a third, their after-tax incomes grew substantially faster than their pre-tax incomes. The figure looks at inflation-adjusted pre-tax and after-tax income growth for the 400 top-income families between 1992 and 2007, based on new data recently released by the Internal Revenue Service. It shows that while pre-tax income grew by a staggering 409% over that 15-year period, after-tax income increased even more, by 476%.

The third line in the figure offers some perspective by showing the change in the pre-tax median household income over the same period, which grew just 13.2%. The median pre-tax household income for a family of four in 2007 was $50,233, while the top-earning 400 households earned a median $345 million, almost 6900 times as much income. In contrast, in 1992 the ratio was just a sixth as large, with the top 400 households having 1124 times as much income.

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