The Rich Are Getting Much Richer, but Don't Blame Taxes

Slate's Tim Noah has a cool series on the "Great Divergence," the growing income gap between the rich and the poor -- and between the richest and the merely rich.

The Great Divergence is two concentric movements. The broadest divergence is between the top quintile (or 20 percent) and the middle. In 1979, the pool of income in the top fifth was 8X the bottom fifth. By 2007, the top quintile out-earned the bottom by a factor of 14.

Inside that divergence, like a second nesting doll, is the story of the top one percent. Since 1973, the share of income among the top percentile of earners tripled, growing from 8 percent to 24 percent. That means the one percent of earners today take home a fourth of all the cash earned in America.

Want a picture to go with that stat? Here we go:

Chart of the Top Ten Percent Income Share, 1917 - 2008.


Tim is spending the next two weeks counting the reasons for this great divergence. To date, he has rejected: race, gender, and immigration. I'm not sure what reasons he will accept as legitimate, but I hope he spends a good deal of time talking about health care.

One thing is for sure: federal taxes aren't impoverishing the bottom 20 percent. Effective federal tax rates (that's an estimate for what you pay in overall federal taxes, including income, payroll, corporate and excise taxes) have fallen dramatically for the top one percent, but they also fell considerably for the bottom fifth. Wages are stagnating, but taxes on those wages have declined, as well.

tax rates 30 years.png



Presented by

Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

Why Principals Matter

Nadia Lopez didn't think anybody cared about her middle school. Then Humans of New York told her story to the Internet—and everything changed.

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register with Disqus.

Please note that The Atlantic's account system is separate from our commenting system. To log in or register with The Atlantic, use the Sign In button at the top of every page.

blog comments powered by Disqus

Video

A History of Contraception

In the 16th century, men used linen condoms laced shut with ribbons.

Video

'A Music That Has No End'

In Spain, a flamenco guitarist hustles to make a modest living.

Video

What Fifty Shades Left Out

A straightforward guide to BDSM

More in Business

Just In