Telling us what we’ve probably already suspected, the Congressional Budget Office has released a new report revealing that the rich got much richer over the last three decades.
The rest of America, however, hasn’t fared as well.
According to the CBO, the top 1% of the wealthiest households saw their after-tax incomes rise 275% between 1979 and 2007.
Income for the middle 60% of American households rose only 40% in the same time frame. But even they are doing better than the bottom 20% of households who saw their income rise by just 18% in the last 30 years.
Source: Congressional Budget Office
CBO Director Doug Elmendorf informed Congress that he doesn’t see forces that would cause the income gap to reverse in coming years.
In fact, economist believe the 9-9-9 plan and other similar flat tax plans touted by several Presidential candidates would actually widen the income gap.
Michael Linden, Director of Tax and Budget Policy at the Center for American Progress Action Fund writes:
Today, someone in the richest 1 percent typically pays about 30 percent of his or her income in federal taxes. Since people at the top of the income ladder make about half of their income from capital gains, and only spend about half of their income in a given year, their tax rate would drop all the way down to 13.5 percent. That’s even lower than what middle-income people pay today.
No wonder the Occupy Wall Street movement has spread like wildfire.
So much for trickle down economics.
Once we understand the true nature of wealth we can start making our money work for us instead of against us.
Personal finance is about more than math. It's about behavior. Change your behavior and you change your financial situation.
When we spend money we're really exchanging time spent on the job (our life energy) for a product. Understanding this leads to better buying decisions.
Put your finances back on track with Michelle Singletary's twenty-one-day financial fast.
Comments on this entry are closed.
{ 2 trackbacks }