Although 2007, the most recent year for which this new data is available, preceded the financial meltdown, similar recessions have proven but small stumbling blocks for the super-rich. As the Center on Budget and Policy Priorities reports in its analysis of recent CBO data, history show us that the awesome gap between rich and rest of us in 2007 may likely survive and thrive in the near future.
This new CBO data on after-tax income show that the cavernous divide between the richest 1 percent and the middle and poorest fifths in the U.S. became Grand Canyonesque between 1979 and 2007. The uber-rich more than tripled their security perimeter from the rest of us untouchables in the last three decades. By 2007, these fat cats gobbled up almost 24% in after-tax income than the middle fifth of Americans, and nearly 75 percent more than the poorest fifth.
The Center’s analysis of this new CBO data explains that though the country as a whole enjoyed an after-tax household income increase of 55 percent over this time period, the already super-rich luxuriated in an increased share of this increase while the rest of us saw our share of the increase shrink.
IPS’ own Chuck Collins and Sam Pizzigati cast more light on this troubling trend as they report in their April 2010 piece that middle-income Americans came into 2001 paying a higher share of their incomes into federal taxes that 50 years prior, while wealthy Americans ushered in the 21st century paying far less in federal taxes then in prior decades.
The tax shift we have witnessed since the 1950s has been enormous. From 1950 through 1963, the federal tax rate on ordinary personal income over $400,000 never dropped below 91 percent. Between 1936 and 1980, that same top rate never dropped below 70 percent.
But today, the top personal income tax rate, after the 2001 tax cut, is 35 percent (If allowed to expire at the end of 2010, this rate will return to the 39.6 percent level in place during the Clinton years).
Tough times; troubling trends.