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

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.

{mosads}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 Warren (D-Mass.) and Sen. Bernie Sanders (I-Vt.) making it central to their campaigns. 

They have accused President Trump 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.