Wealth gap grows – Bigger tax burden

A new government report says the gap between the wealthiest and poorest U.S. households grew in the 1980s and 90s, while the wealthiest households paid relatively more in taxes, The New York Times reported May 31.

The share of pretax income going to the top fifth of households grew to 53.2 percent in 1997 from 45.9 percent in 1979, while the share of income going to the bottom three-fifths fell to 26.9 percent from 32.2 percent, according to a comprehensive look at incomes and taxation by the Congressional Budget Office.

For the bottom fifth, the share of income fell to 4 percent from 5.3 percent.

Average pretax income among the top 1 percent grew 142 percent to $1.02 million in 1997 from $420,200 in 1979, while among the top fifth of households, average pretax income grew 52.9 percent to $167,500 from $109,500, adjusted for inflation.

For the bottom fifth of households, however, pretax income fell 3.4 percent to $11,400 in 1997 from $11,800 in 1979.

“The distribution of income among households grew substantially more unequal during the 1979-1997 period,” the budget office said.

An analysis of the budget office study by the Center on Budget and Policy Priorities, a liberal research group, reaches a similar conclusion.

The group says “income gaps between rich and poor and between rich and middle class widened in the 1980’s and 1990’s alike and reached their widest point on record in 1997.”

The top 1 percent of households – about 1 million of them – paid 23 percent of total federal taxes in 1997, up from 15.5 percent in 1979.

For full story, go to The New York Times.

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