Richest 1 percent have seen income share grow 70%: CBO

Richest 1 percent have seen income share grow 70%: CBO
© iStock

The highest 1 percent of earners in the United States saw their share of income grow some 70 percent between 1979 and 2016, even after taxes and government transfers are taken into account, according to new data released by the Congressional Budget Office (CBO) and analyzed by The Hill.

Data in the annual income distribution report showed that in 1979 the top 1 percent of earners had taken in 7.4 percent of all U.S. income after taxes and transfers, about the same as the entire bottom 20 percent of earners.

ADVERTISEMENT

By 2016, the top earners' share had grown to 12.6 percent , while the share of income earned by the bottom 20 percent remained relatively stable, dropping 0.3 percentage points. 

That top income figure was a drop from the 2000s. In 2007, just before the financial crisis, the richest 1 percent's share rose to a peak of 16.6 percent of all income.

In the meantime, the bottom 80 percent of earners saw smaller fluctuations in their share of wealth, amounting to one or two percentage points.

Income inequality has been a major issue in the Democratic presidential primary, with top-tier candidates such as Sen. Elizabeth WarrenElizabeth Ann WarrenHarris tops Biden in California 2020 poll The Hill's Morning Report - A raucous debate on race ends with Trump admonishment Democrats fret over Trump cash machine MORE (D-Mass.) and Sen. Bernie SandersBernie SandersSanders to call on 2020 Democrats to reject money from drug, health insurance industries The hidden connection between immigration and health care: Our long-term care crisis Harris tops Biden in California 2020 poll MORE (I-Vt.) making it central to their campaigns. 

They have accused President TrumpDonald John TrumpPompeo changes staff for Russia meeting after concerns raised about top negotiator's ties: report House unravels with rise of 'Les Enfants Terrible' Ben Carson: Trump is not a racist and his comments were not racist MORE and Republicans of worsening inequality by providing the lion’s share of a 2018 tax cut to the rich. CBO data on how the law affected inequality will not be available for two more years.

The CBO data address how income inequality looked even after government redistribution, which puts a higher tax rate on the wealthy and provides more benefits to the poor through tax credits and programs such as Medicaid, Children’s Health Insurance, Social Security, and nutritional programs. 

Before such transfers, the CBO found that the top 20 percent of earners saw their real income rise 99 percent from 1979-2016, while the bottom 80 percent saw their income increase at a third the rate, just 33 percent. 

But the government programs, the report showed, had helped the poor dramatically over the 47-year period. 

After taxes and transfers, the poorest 20 percent saw their income increase 85 percent, still less than the 101 percent increase the top quintile saw, but more than the 47 percent increase the middle three quintiles saw.