This updates a constant theme here pretty well.
Income inequality grew significantly in 2005, with the top 1 percent of Americans — those with incomes that year of more than $348,000 — receiving their largest share of national income since 1928.
The top 10 percent, roughly those earning more than $100,000, also reached a level of income share not seen since before the Depression. share of national income since 1928, analysis of newly released tax data shows.
— "Income Gap is Widening, Data Shows," New York Times
Said one of the academics who analyzed the data: “If the economy is growing but only a few are enjoying the benefits, it goes to our sense of fairness. It can have important political consequences.”
We are beginning to see some of these consequences played out in Minnesota as tax proposals creep and dodge through the legislature. Republicans are screaming and finger-pointing. "Spending spree!" "Job killer!" "The rich will leave the state!" "Class warfare!!!"
But as Warren Buffet said, "And my class won." (With irony, folks, with irony.)
The economy is doing great, if you're near the top. It's even doing all right on average. But as the data show, the growth isn't making it to the average, the median, or most of the remaining 90 percent.
Click on the Times graphic with the article to see the timescale of changes. The long period of prosperity when income growth for the bottom 90 percent did a bit better than the top 1 percent lasted from post-WWII to about 1985. Over the last three years, the top 0.01 percent did substantially better than the top 1 percent.
In a related story, Minnesota's income growth for 2005 ranked 46th in the U.S.
I've written before about how we shouldn't get too excited about these comparative rankings or year-by-year changes. Louisiana, for example, had strong per-capita income growth because it lost a lot of poor residents thanks to Hurricane Katrina. Income growth has been strong in Wyoming because of an oil and gas boom has suddenly brought a lot of relatively high-paying jobs to a state without much of an economic base.
What's important are the trends. Still, there are troubling trends in areas that represent leading economic indicators, such as educational attainment, health access and congestion. These are heading in the wrong direction.
A lot of the battle over taxes this year is really a battle over what action to take to arrest the trends. We may not have all the answers, but under the Pawlenty and Ventura tax cuts, the trends have gotten worse, not better.
Unless you're at the top.
