Income Disparity

http://www.latimes.com/news/opinion/la-oe-rutten24-2010feb24,0,1591265.column

By Tim Rutten
February 24, 2010

On the eve of our worst financial crisis since the Depression, the United States was -- from an economic standpoint, at least -- a less equal nation than at any time since the Gilded Age.

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We have a pre-recession portrait of American inequality because, in 1992, the Clinton administration asked the Internal Revenue Service to begin tracking the incomes and tax payments of the country's 400 richest households. During the George W. Bush years, the IRS continued to collect the data, but -- you'll be shocked to know -- didn't release it to the public.

Last week, the figures for 2007 were quietly made available, and, as David Cay Johnston, who formerly covered tax policy for the New York Times and now teaches at Syracuse University's law school, points out, "The incomes of the top 400 American households soared to a new record high in dollars and as a share of all income in 2007, while the income tax rates they paid fell to a record low."

Between 2006 and 2007, according to the IRS, the average income of the country's 400 top taxpayers rose 31%, from $263.3 million to $344.8 million. At the same time, their effective income tax rate declined more than half a percentage point, from 17.17% in 2006 to 16.62% in 2007.

That's all of a piece with trends documented by economists Emmanuel Saez and Thomas Piketty, whose research into global income patterns shows that between 1992 and 2007, America's 400 richest households increased their average income by 399%, while the bottom 90% of the country's households gained just 13%. (Those percentages, by the way, reflect inflation-adjusted dollars.)

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Here's a telling example: Over the last 10 years, financial managers enjoyed the largest occupational gains in income. Their average annual salary climbed from $96,302 to $112,632. At the same time, the wages of their executive secretaries and administrative assistants actually fell, from $45,058 to $44,075. Retail sales clerks, janitors, preschool teachers and medical assistants also experienced declining annual incomes.

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