CBO Inequality Data via Brookings

Gary Burtless brings us changes in real after-tax income for various quantiles, since 1979 and 2000.  Unsurprisingly, the incomes of the wealthy have a much higher beta to the economy than the poor.  Yet people keep presenting that as a surprise.  But Burtless is also working with a slightly different, and more relevant definition of income – real, after-tax.


These are after-tax figures.  Burtless also points out that after-transfer figures reveal the degree to which tax relief and government programs insulated lower quantiles from the recession:



The things that have become terribly expensive in the last 5 decades are the things we’ve been subsidizing: healthcare, education and real estate.  Healthcare is directly subsidized through government programs, and the degree to which that makes a difference is clear here.  Education transfers are outside this analysis, but all colleges are running a progressive pricing system.  Redistribution mechanisms have grown dramatically in the US, but they have become far more opaque than direct government transfers.

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