TaxProf Blog takes note of a report from the Tax Foundation that finds that since the economic downturn of 2007-2009 the percent of income earned by the top 1% of income earners has returned to the level that it was during the Clinton Administration:
The most recent published studies on income inequality use 2006 or 2007 as their end point, without fully correcting for the business cycle. … It is deeply misleading to talk about income inequality without properly taking into account the business cycle. Since the peak of the business cycle in 2007, personal incomes have collapsed to a degree not seen since the Great Depression. The most dramatic collapse has been in high incomes, as the most recent IRS data shows. For example, since 2007 the number of millionaires has dropped 40%, while income reported by millionaires has dropped in half. …
while the progressivity of the federal income tax is higher than it’s been since 1986.
I agree with the assessment that President Obama is likely to base his re-election campaign, at least in part, on a campaign for greater income equality. Is he fighting the last war? Has that mission already been accomplished?
My own complaints haven’t so much been about the top .1% or income earners or the top 1% of income earners but the top 10% of income earners, far, far too many of whom are direct beneficiaries of federal largesse.
It will be a good trick to run on income inequality without proposing anything that will actually do anything about it but that seems to be the plan.
Mickey Kaus makes a good point. Americans don’t have much problem with income inequality but they do have a problem with social inequality:
I understand why President Obama might want to water down the money-egalitarianism of the left into a simple “equal sacrifice” argument for higher upper tax brackets. But when even crusading opinion journalists who work for The New Republic have to deny their interest in actually equalizing incomes for its own sake then it kind of proves Andrew Kohut’s point that Americans reject that point of view, no? … P.S.: I suspect polls will show Americans do care about social equality (that we are “equal in the eyes of each other,” as Ronald Reagan put it). The popular desire for social equality is why Mitt Romney ate at McDonald’s today