The Congressional Budget Office released its October report last week titled Trends in the Distribution of Household Income Between 1979 and 2007. The report cites a growing, and startling, divide of income inequality between the top income earners and everyone else. Income for the top one percent grew by 275% while income for all other groups rose only 65% or lower. The report also notes that business income and capital gains grew faster than labor income. To the right is a graph from the report illustrating wage growth per income distribution.
The CBO releases this report as the tax policy debate in Washington grows more contentious. The two parties aggressively oppose each's plans as Democrats want to raise taxes on top income earners while Republicans want to lower taxes. Democrats reference the CBO's report to defend increasing the tax burden for the wealthy. Republicans, however, argue that targeting any income distribution hurts the economy and, furthermore, sensationalize the Democrat's plans as class warfare.
This article appears in Oct 27 – Nov 2, 2011.