I’m back! I was in the middle of moving and just overwhelmed with everything. Anyway. Talking Points Memo posted a link to an article at Slate about income inequality in the U.S., and particularly the increasing proportion of total U.S. income earned by the very rich. Timothy Noah refers to the “great compression” as a time period when income concentration among top earners dropped significantly, and argues that in the past three decades we’ve seen a “great divergence,” with increasing income inequality hitting levels not seen since the Great Depression:

A slideshow accompanies the article, providing more info on the changes Noah discusses. A few examples (the slideshow provides the data source used to create each image):

Even among the very rich, we see increasing divergence, with the super-ultra rich, the top 0.1% of earners, now making 8% of all U.S. income:

A comparison to some other countries (I don’t know why these specific nations were chosen for the comparison):

Keep in mind, this data includes only income. Wealth — the worth of all assets, including retirement and savings accounts, stocks, homes, cars, and anything else of value — is much more unequally distributed.

Congress is about to be embroiled in a major debate about whether to extend the tax cuts on high incomes; as both sides weigh in, here’s some context to keep in mind:

The effective tax rate is what people actually pay, as opposed to what their tax rate theoretically is. While we’ve certainly seen a large drop since the late ’70s, Noah argues that, compared to other economic changes, the effective tax rate hasn’t affected the rise in income inequality much. It plays a role, yes, but changing the tax rate on the very rich doesn’t affect the overall distribution of income a huge amount, in part because the effective rate, what people end up actually paying, generally ends up being smaller than what they theoretically owe based on the stated tax rate, once you take into account deductions, write-offs, loopholes, and so on.

So…happy post-Labor Day!

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