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Income inequality grows

Thursday, January 14, 2016

The Eugene Register Guard, December 27, 2015

As the United States has moved further away from the recession it has become painfully clear that, for some, things are far from getting back to “normal.”

The recession deepened, or accelerated, economic divisions in the United States — widening the gap between not just rich and poor, but rich and middle class.

The shares of income and wealth in the United States held by the most affluent families “are at modern historically high levels,” a 2013 study by the Federal Reserve System found.

While average family income in the United States overall rose 4 percent from 2010 to 2013 after falling 7 percent during the recession, that increase in average income was tugged upward by gains among the wealthiest Americans, not the middle class or poor, according to the Fed’s study…

We Respond & Your Comments

“Progressive” politicians bemoan “income inequality.” But there’s a secret they don’t want you to know. It’s called “income mobility.” If people knew about it, taxing the rich to reduce income inequality would be a tougher sell.

Here it is: people move up and down the income scale. They graduate and take low paying entry level jobs. As they gain experience they move up the scale. Incomes peak in their later working years and typically fall when they retire.

A Treasury Dept. study on income mobility from 1996-2005 (the most recent study we could find) revealed that:

  • Over 50% of taxpayers moved to a different income quintile over the period;
  • About half of those who were in the bottom quintile in 1996 moved to a higher quintile by 2005;
  • 75% of those in the top .001% of earners in 1996 dropped out of this group by 2005.

Now you know it: income inequality isn’t the catastrophe the taxing class says it is, because incomes aren’t static. Lots of people toward the bottom of the income scale move to lower middle class and higher. And many at or near the top move the other way.

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