The Myth of the 1%
The skewing of income toward the top 1% of earners has become a central issue in American politics, with both Republicans and Democrats proposing higher taxes on the rich. But new research finds that it may not be true, suggesting that policymakers would do better to focus more on helping the working class.
WASHINGTON, DC – For decades, the share of national income held by the top 1% in the United States has soared. Income inequality, which former President Barack Obama declared “the defining challenge of our time,” has become a major issue in American politics, with both Republicans and Democrats proposing higher taxes on the rich. The idea, peddled by nationalists and progressives, that the economic system is rigged against ordinary workers and households has also fanned the flames of populism. Some even argue that economic inequality threatens democracy.
And yet, the belief that income inequality has risen sharply may be wrong. New research by Gerald Auten of the US Treasury Department and David Splinter of the congressional Joint Committee on Taxation finds that the after-tax income share of the top 1% has barely changed since 1962. This stands in stark contrast to the work of Thomas Piketty, Emmanuel Saez, and Gabriel Zucman, which has shaped policy and political debate in recent years: the trio conclude that the income share of the top 1% increased by roughly 55% over the same period.
Rather than answer the question of who is right (although I believe that Auten and Splinter are closer to the truth), it is more useful to consider whether the top 1% should be our focus. Seen from a broader perspective, the debate over income equality does little for those who need help the most.