By Rober Pear, The New York Times, October 25, 2011
WASHINGTON — The
top 1 percent of earners more than doubled their share of the nation’s income
over the last three decades, the Congressional Budget Office said Tuesday, in a
new report likely to figure prominently in the
escalating political fight over how to revive the economy, create jobs and
lower the federal debt.
In addition, the report said, government policy has become less
redistributive since the late 1970s, doing less to reduce the concentration of
income.
“The equalizing effect of federal taxes was smaller” in 2007 than in
1979, as “the composition of federal revenues shifted away from progressive
income taxes to less-progressive payroll taxes,” the budget office said.
Also, it said, federal benefit payments are doing less to even out the
distribution of income, as a growing share of benefits, like Social Security, goes to older Americans,
regardless of their income.
The report, requested several years ago, was issued as lawmakers
tussle over how to reduce unemployment, a joint committee of Congress weighs changes in the tax code and protesters
around the country rail against disparities in income between rich and poor.
In its report, the budget office found that from 1979 to 2007, average
inflation-adjusted after-tax income grew by 275 percent for the 1 percent of
the population with the highest income. For others in the top 20 percent of the
population, average real after-tax household income grew by 65 percent.
By contrast, the budget office said, for the poorest fifth of the
population, average real after-tax household income rose 18 percent.
And for the three-fifths of people in the middle of the income scale,
the growth in such household income was just under 40 percent.
The findings, based on a rigorous analysis of data from the Internal
Revenue Service and the Census Bureau, are generally consistent with studies by
some private researchers and academic economists. But because they carry the
imprimatur of the nonpartisan budget office, they are likely to have a major
impact on the debate in Congress over the fairness of federal tax and spending
policies.
Also cited as factors contributing to the rapid growth of income at
the top were the structure of executive compensation; high salaries for some
“superstars” in sports and the arts; the increasing size of the financial
services industry; and the growing role of capital gains, which go
disproportionately to higher-income households.
The report found that higher-income households got a larger share of
the pie, while other households got smaller shares.
Specifically the report made these points:
¶ The share of after-tax household income for the top 1 percent of the
population more than doubled, climbing to 17 percent in 2007 from nearly 8
percent in 1979.
¶ The most affluent fifth of the population received 53 percent of
after-tax household income in 2007, up from 43 percent in 1979. In other words,
the after-tax income of the most affluent fifth exceeded the income of the
other four-fifths of the population.
¶ People in the lowest fifth of the population received about 5
percent of after-tax household income in 2007, down from 7 percent in 1979.
¶ People in the middle three-fifths of the population saw their shares
of after-tax income decline by 2 to 3 percentage points from 1979 to 2007.
The study was requested by Senators Max Baucus, Democrat of Montana
and chairman of the Finance Committee, and Charles E. Grassley of Iowa, when he
was the senior Republican on the panel.
Representative Sander M. Levin of Michigan, the senior Democrat on the
Ways and Means Committee, said the report was “the latest evidence of the
alarming rise in income inequality.”
House Republicans pushed back Tuesday against President Obama’s
complaint that they were blocking bills to create jobs. Speaker John A. Boehner
said he agreed with Mr. Obama’s new slogan, “we can’t wait,” and he said that 15
House-passed bills were “sitting over in the Senate, waiting for action.”
On Tuesday, the White House endorsed another bill, which is likely to
be passed by the House this week with bipartisan support. The bill would repeal
a requirement for federal, state and local government agencies to withhold 3
percent of certain payments to suppliers of goods and services and to deposit
the money with the Internal Revenue Service.
This requirement was originally adopted as a tax-compliance measure,
and the Congressional Budget Office said its repeal would reduce federal
revenues by $11 billion over 10 years.
House Republicans would offset the cost with a bill that reduces
federal spending on Medicaid under the 2010 health care law. The White House said it
supported the bill, intended to fix an apparent error in the law, under which
hundreds of thousands of middle-income early retirees can get Medicaid coverage
meant for the poor.
The joint Congressional committee on deficit reduction is considering
changes in a wide range of benefit programs.
Representative Steny H. Hoyer of Maryland, the No. 2 House Democrat,
said Tuesday that he was hopeful but not entirely confident that the panel
would succeed in reaching a bipartisan agreement to reduce federal deficits by
$1.2 trillion over 10 years.
“Hopeful is not confident,” Mr. Hoyer said.
No comments:
Post a Comment