Want to tic off a liberal who says that the rich are getting richer and the poor are getting poorer? Show them this report from the Treasury Department that exposes those claims as so much “populist hokum.” The reason it will tic them off is obvious. It takes the wind right out of their class warfare, class envy sails. The reality is that over the last 10 years, the lowest quintile of working people have seen the largest percent increase in their income, 90.5%. At the opposite end of the spectrum, the highest quintile realized an increase of 10 % over the same time period.
A closer examination of that highest quintile, the upper 20% of working people, highlights even more the fallacy of the left’s argument about the rich getting richer. When you look at the top 10 percent of the highest quintile, that is to say, the top ten percent of income earners, they saw their incomes actually decline to the point where the top 1 percent, the ‘filthy rich’, were the biggest losers. Their income decreased by a whopping 25%.
The great irony is that, in the name of reducing inequality, some of our politicians want to raise taxes and other government obstacles to the kind of risk-taking and hard work that allow Americans to climb the income ladder so rapidly. As the Treasury data show, we shouldn’t worry about inequality. We should worry about the people who use inequality as a political club to promote policies that reduce opportunity.
Key findings. . .
- There was considerable income mobility of individuals in the U.S. economy during the 1996 through 2005 period with roughly half of taxpayers who began in the bottom quintile moving up to a higher income group within 10 years.
- About 55 percent of taxpayers moved to a different income quintile within 10 years.
- Among those with the very highest incomes in 1996, the top 1/100 of 1 percent, only 25 percent remained in this group in 2005. Moreover, the median real income of these taxpayers declined over this period.
- The degree of mobility among income groups is unchanged from the prior decade (1987 through 1996).
- Economic growth resulted in rising incomes for most taxpayers over the period from 1996 to 2005. Median incomes of all taxpayers increased by 24 percent after adjusting for inflation.
- The real incomes of two-thirds of all taxpayers increased over this period. In addition, the median incomes of those initially in the lower income groups increased more than the median incomes of those initially in the higher income groups.