I thought this article was exceptionally well-written and well-sourced.

I would be very interested to hear the opinions from some on this site who love to discuss economics as it pertains to the content of the linked article.

The article starts with bullshit, why should I go further.

It is fact, absolute fact that over the last 30 years the rich have got richer while the poor have got poorer.

The fact that you post such while actually ignoring facts is disengenuous at best.

The article starts with bullshit, why should I go further.

It then explains why the claim is vastly overstated and does so convincingly.

Seriously, give it a chance.

Read the article. It isn't hyperbole. It's good analysis and uses stastical facthoods to support its point.

this isn't real is just political bullshit.

Read the article - you've already misconstrued what the authors are saying, and that's because you didn't read it.

From 1979 to 2005 the lower fifth gained 6% in income.....Inflation is 3% per year so the poor have lost quite abit, then take a look at the top 10% and tell me this article is worthy.

Disingenuous bullshit!

From 1979 to 2005 the lower fifth gained 6% in income.....Inflation is 3% per year so the poor have lost quite abit, then take a look at the top 10% and tell me this article is worthy.

From the article, which you refuse to read:

Alan Reynolds, a senior fellow at the Cato Institute, has demonstrated that three major factors missing from the Picketty-Saez data, when included in the calculation, significantly reduce the apparent growing trend in income inequality. Reynolds argues that changes in the tax code, the large expansion of tax sheltered investments, and the growth of transfer payments to individuals can explain the growing trend in the Picketty-Saez data over the past 25 years.

According to Reynolds, "studies based on tax return data provide highly misleading comparisons of changes to the U.S. income distribution because of dramatic changes in tax rules and tax reporting in recent decades." Since 1979, the highest marginal individual tax rate has been reduced from 70% to 35%, while over that same period the corporate tax rate for businesses making over $100,000 has been reduced only from 46% to 39%. This has led to a shift in individuals reporting income on corporate returns to reporting it on individual returns by filing as S-corporations.

Beside changes in the tax code, two major variables cancel out much of the remainder of the growth in income inequality. The first is the large expansion in tax sheltered investments like IRAs and 401(k)s. In 2007, there was an estimated 4.75 trillion dollars in these types of accounts, up from 400 billion 20 years earlier or an increase of nearly 1200%. The second variable is the growth in government transfer payments to individuals; which increased 214% during the same period (inflation adjusted). These variables are not accounted for in the Picketty-Saez data, because the majority of this money is not reported on income tax returns.

Here's more:

The Picketty-Saez data seems even more distorted when compared with the 2007 study published by the U.S. Department of the Treasury entitled, "Income Mobility in the U.S. from 1996 to 2005", which tracked almost 100,000 tax returns over a 10-year period. The study found that, controlling for inflation, nearly 58% of the poorest income group in 1996 had moved to a higher income group by 2005; 26% achieved middle or upper-middle income status and more than 5% made it into the highest income group. For individuals initially starting in the middle income group, 42% had moved to the upper-middle (29.6%) and highest (12.5%) income quintiles. Of those starting in the highest income quintile, over 30% had moved down by the end of the study period.

The study concluded that economic growth resulted in rising incomes for most taxpayers over the study period with the median incomes of all taxpayers increasing by 24% after adjusting for inflation. The only groups to experience a decline in income were those initially in the top 1% and the top 5% groups. The study found that there was substantial income mobility of individuals during the study period, which was unchanged from the previous decade. A major point of the study is that income mobility in the U.S. works down as well as up, a sign that opportunity and merit drive American success.

kind of disengenous to brag about 401k plans these days

Do you know why the lowest brackets enjoyed such income mobility? Because as people age they often make more money. A college grad at an entry level job often shows up in a low bracket - but with the passage of time and andvancement they earn more money each year.

The mobility report is something you really should look into and think about critically, Money.

kind of disengenous to brag about 401k plans these days

The point being is that because they are tax-deferred the income doesn't show up on tax returns - and taxable income is what is used as the basis for the claim that the rich are getting richer and the poor are getting poorer.

What a snow job article, I can't believe you actually believe this stuff.

The top 1 percent of households received 70 times as much in average after-tax income as the bottom one-fifth of households in 2005 the widest such income gap on record, with data available back to 1979. The previous record was 63 times as much, set in 2000. In 1979, by comparison, the richest households made 23 times as much as the poorest households.

What part of this don't you understand?

The CATO Institute?

A rethug "Think" Tank put this piece of crap together?
No wonder they came to that conclusion.

The point being is that because they are tax-deferred the income doesn't show up on tax returns - and taxable income is what is used as the basis for the claim that the rich are getting richer and the poor are getting poorer.

You have got to be kidding me!

For one the article is trying to say the poor are using more of the tax deferred than the rich.....LOL! The poor don't even qualify for tax deferred in most cases and at 15,000 a year income not too much is going to SAVINGS. How disingenuous can this get.

As far as 401K's, it is something like less the 40% of the working population even have such a thing available and only 45% of that even are able to contribute to it.

I expect better from you JJ.

The average income of the top 1 percent of households was more than 21 times that of the middle one-fifth of households. This, too, was the widest such ratio on record.

And the right think tanks contribute to the lies and the republicans wonder why they are losing their shorts.

The right just hasn't figured out that real people are feeling the pinch and having their wages reduced over and over year after year while the right continue to piss on their backs and tell them it is all equal.

#15 | Posted by moneywar

I agree that the authors didn't provide enough information to show how the vast increase in tax-deferred investments narrows the disparity - I think the opposite case can just as easily, if not moreso, be made; as you just did.

The authors do effectively point to other factors that make the income disparity seem worse than it actually is.

The CBO data show that gaps in income inequality widened significantly between 2004 and 2005. The share of total after-tax income going to the top 1 percent rose from 14.0 percent in 2004 to 15.6 percent in 2005, an increase of 1.6 percentage points. This amounts to nearly $180,000 per household in the top 1 percent, which is equivalent to approximately $123 billion in additional income for the top 1 percent as a whole.

The top 1 percent saw its total income rise by $180,000 in 2005 more than the average middle-income household makes in three years.

In contrast, income gains between 2004 and 2005 were quite modest for middle- and lower-income households. Average income rose 0.8 percent (or $400) for middle-income households and 1.3 percent (or $200) for the poorest fifth of households. This compares to a stunning 20.2 percent increase in income ($180,000 per household) for the top 1 percent. In percentage terms, this was the largest one-year income gain for the top 1 percent in 17 years.[4] In dollar terms, it was the largest one-year gain since 1979, the first year for which the CBO data are available.

It is a surprise Jeff J hasn't felt the pinch.

The authors do effectively point to other factors that make the income disparity seem worse than it actually is.

And it is a crock, the poor don't have other factors and the fact that it was presented without substantiation makes it nothing more than bullshit rhetoric.

The fact you're lending credence to such bullshit is surprising, guess you just want to see what YOU want to see and dismiss the reality of real world for political purposes. The thing I don't get, this blindness helps you not one bit.

And this kind of addresses the article you post and makes these authors look stupid.

The growing concentration of income at the top of the income scale continues a long-term trend. Income concentration grew steadily during the latter half of the 1990s, rising through 2000, a year that the stock market hit a record high. From 2000 to 2002, income became less concentrated at the very top, partially due to the drop in the stock market; after-tax incomes fell from 2000 to 2002 for most income groups, but declined the most for the top 1 percent. From 2003 through 2005, however, the long-term trend toward growing income inequality returned. The CBO figures show that in 2005, the share of income going to the top 1 percent reached 15.6 percent, compared with the previous high of 15.5 percent in 2000.[5]

Well, the rich had some stupid investors and they lost their shorts for 2 years and then gained it all back the following 2 years.

Shocking how these rich right organizations convolute the data to make unsuspecting readers think the poor are better than they have ever had it.

The CBO data do not provide a direct measure of the impact of these tax policy changes because they reflect the impact not only of legislative changes but also of changes in household incomes and other factors that influence tax payments. Direct estimates by the Urban Institute-Brookings Institution Tax Policy Center that consider only the impact of the recent tax policy changes provide definitive evidence that the recent tax cuts have widened income inequality. The Tax Policy Center has found that as a result of the tax cuts enacted since 2001:[6]

Households in the bottom fifth of the income spectrum received tax cuts in 2006 that averaged $20 and raised their after-tax incomes by an average of 0.3 percent.

Households in the middle fifth of the income spectrum received tax cuts averaging $740 that raised their after-tax incomes an average of 2.5 percent.

But the top 1 percent of households received tax cuts averaging $44,200 in 2006, which increased their after-tax income an average of 5.4 percent.

And households with incomes exceeding $1 million received an average tax cut of $118,000 in 2006, which represented an increase of 6.0 percent in their after-tax income. That is more than double the percentage increase received by the middle fifth of households. [7]

Shocking JJ, didn't do enough research but believed this ball of crap printed by the "American thinker".......LOL! It appears the "American thinker" isn't too much in actual thought and real creditable knowledge.

I'll post this again:

Alan Reynolds, a senior fellow at the Cato Institute, has demonstrated that three major factors missing from the Picketty-Saez data, when included in the calculation, significantly reduce the apparent growing trend in income inequality. Reynolds argues that changes in the tax code, the large expansion of tax sheltered investments, and the growth of transfer payments to individuals can explain the growing trend in the Picketty-Saez data over the past 25 years.

According to Reynolds, "studies based on tax return data provide highly misleading comparisons of changes to the U.S. income distribution because of dramatic changes in tax rules and tax reporting in recent decades." Since 1979, the highest marginal individual tax rate has been reduced from 70% to 35%, while over that same period the corporate tax rate for businesses making over $100,000 has been reduced only from 46% to 39%. This has led to a shift in individuals reporting income on corporate returns to reporting it on individual returns by filing as S-corporations.

None of your provided snippets address, or account for any of this, Money.

The Picketty-Saez data seems even more distorted when compared with the 2007 study published by the U.S. Department of the Treasury entitled, "Income Mobility in the U.S. from 1996 to 2005", which tracked almost 100,000 tax returns over a 10-year period. The study found that, controlling for inflation, nearly 58% of the poorest income group in 1996 had moved to a higher income group by 2005; 26% achieved middle or upper-middle income status and more than 5% made it into the highest income group.

58% started in the lowest bracket and moved up at least one bracket during the measured period of time.

I've gotta run, Money.

Money,

You are talking in a completely different direction than that taken by my linked article.

You (self-admittedly) didn't bother to read it and thus you are 'refuting' arguments that aren't even being made.

Slow down.

Read the article carefully, and without cherry-picking it's points refute what it says. You did a pretty good job of just that with its analysis of the increase in tax-deferred investments. Now, try that for the remainder of it.

You do this alot, you falsely assign positions that aren't even being taken.

Anyhow, really outa here now.

...when included in the calculation, significantly reduce the apparent growing trend in income inequality...

Nothing is shown to substantiate this, in fact in reality it is the other way around.

None of your provided snippets address, or account for any of this, Money.

Any of what??? It doesn't say shit but does lead you into assumptions that clearly are not present.

Changes in tax code increased inequality and is easily seen by my snippets.

Large expansion of tax sheltered investments clearly indicate the inequality is really greater then it is not less.

Growth of transfer payments to individuals....LOL you mean its not income? or do you suppose these transfer payments are going to the poor?????

Get real!

Jeff, you can't discuss this with a liberal because they will always use willful ignorance and attack minutia.

It's all they have.

Plus, no liberal on this blog has a clue about finance or related subjects, they never have.

You (self-admittedly) didn't bother to read it and thus you are 'refuting' arguments that aren't even being made.

Look at my #12 post which indicates I read the damn bullshit article.

It's a crock of crap, and the fact that it is written to appear rational and common sense doesn't mean it has an ounce of truth.

And if what this assumption contains, the poor lost almost all the 401K's over the last year which leaves and even wider margin of inequality.

Common JJ, you're far smarter than this.

The whole basis of the article is to say obama taxing the top 5% is not enough for what he is trying to do.........well no shit sherlock! Everyone knows this already.

I glad to see the article points out the Tboone pickins wages went down so therefore we have mobility.

LOL!

.....Common JJ, you're far smarter than this......

Come on.....