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Income inequality in the United States. Income inequality in the United States has increased significantly since the 1. This trend is evident with income measured both before taxes (market income) as well as after taxes and transfer payments. Income inequality has fluctuated considerably since measurements began around 1.

Measured for all households, U. S. income inequality is comparable to other developed countries before taxes and transfers, but is among the highest after taxes and transfers, meaning the U. S. shifts relatively less income from higher income households to lower income households. Measured for working- age households, market income inequality is comparatively high (rather than moderate) and the level of redistribution is moderate (not low). These comparisons indicate Americans shift from reliance on market income to reliance on income transfers later in life and less than households in other developed countries do.[2][3]The U. S. ranks around the 3. U. S. federal tax and transfer policies are progressive and therefore reduce income inequality measured after taxes and transfers.[5] Tax and transfer policies together reduced income inequality slightly more in 2.

While there is strong evidence that it has increased since the 1. United States regarding the appropriate measurement, causes, effects and solutions to income inequality.[5] The two major political parties have different approaches to the issue, with Democrats historically emphasizing that economic growth should result in shared prosperity (i. Republicans tend to downplay the validity or feasibility of positively influencing the issue (i. Overview[edit]. U. S. pre- tax and after- tax income share of top 1% households from 1. CBO[1] and Piketty- Saez[7]).

Four charts that describe trends in income inequality in the United States. U. S. income inequality has grown significantly since the early 1. The U. S. consistently exhibits higher rates of income inequality than most developed nations due to the nation's enhanced support of free marketcapitalism and less progressive spending on social services.[1. The top 1% of households received approximately 2.

The top 1% is not homogeneous, with the very top income households pulling away from others in the top 1%. For example, the top 0. According to IRS data, adjusted gross income (AGI) of approximately $4. Most of the growth in income inequality has been between the middle class and top earners, with the disparity widening the further one goes up in the income distribution.[2. The bottom 5. 0% earned 2. Income for the middle 4. To put this change into perspective, if the US had the same income distribution it had in 1.

Half of the U. S. U. S. Census data.[3. Watch Time Rush 4Shared on this page. The trend of rising income inequality is also apparent after taxes and transfers.

A 2. 01. 1 study by the CBO[3. America's income distribution.[3. U. S. federal tax and transfer policies are progressive and therefore substantially reduce income inequality measured after taxes and transfers. They became moderately less progressive between 1. Income transfers had a greater impact on reducing inequality than taxes from 1. Americans are not generally aware of the extent of inequality or recent trends.[3. There is a direct relationship between actual income inequality and the public's views about the need to address the issue in most developed countries, but not in the U.

S., where income inequality is worse but the concern is lower.[3. The U. S. was ranked the 6th worst among 1. Gini index.[3. 4]There is significant and ongoing debate as to the causes, economic effects, and solutions regarding income inequality. While before- tax income inequality is subject to market factors (e. U. S. income inequality is comparable to other developed nations before taxes and transfers, but is among the worst after taxes and transfers.[2][3. Income inequality may contribute to slower economic growth, reduced income mobility, higher levels of household debt, and greater risk of financial crises and deflation.[3. Labor (workers) and capital (owners) have always battled over the share of the economic pie each obtains.

The influence of the labor movement has waned in the U. S. since the 1. 96. The share of total worker compensation has declined from 5. GDP) in 1. 97. 0 to nearly 5.

This has led to concerns that the economy has shifted too far in favor of capital, via a form of corporatism,[3. Although some have spoken out in favor of moderate inequality as a form of incentive,[4. Yale. Nobel prize for economics winner Robert J. Shiller, (who called rising economic inequality "the most important problem that we are facing now today"),[4. Federal Reserve Board chairman Alan Greenspan, ("This is not the type of thing which a democratic society – a capitalist democratic society – can really accept without addressing"),[4. President Barack Obama (who referred to the widening income gap as the "defining challenge of our time").[5. History[edit]. U.

S. income shares of the top 1% and top 0. Post- civil war era to around 1.

The level of concentration of income in the United States has fluctuated throughout its history. The first era of inequality lasted roughly from the post- civil war era or "the Gilded Age" to sometime around 1. In 1. 91. 5, an era in which the Rockefellers and Carnegies dominated American industry, the richest 1% of Americans earned roughly 1.

By 2. 00. 7, the top 1 percent accounted for 2. The great Compression, 1. From about 1. 93.

Great Compression"[5. United States fell dramatically. Highly progressive New Deal taxation, the strengthening of unions, and regulation of the National War Labor Board during World War II raised the income of the poor and working class and lowered that of top earners.[5. From the early 2.

Nobel laureate economist Paul Krugman.[5. For about three decades ending in the early 1. US working class and political support for income leveling government policies. Wages remained relatively high because American manufacturing lacked foreign competition, and because of strong trade unions. By 1. 94. 7 more than a third of non- farm workers were union members,[5.

According to Krugman political support for equalizing government policies was provided by high voter turnout from union voting drives, the support of the otherwise conservative South for the New Deal, and prestige that the massive mobilization and victory of World War II had given the government.[5. FR-EE Lake Consequence Full Movie on this page. Post- 1. 97. 0 increase[edit]. Inflation- adjusted percent increase in pre- tax and after- tax household income between 1.

The return to high inequality, or to what Krugman and journalist Timothy Noah have referred as the "Great Divergence",[5. Studies have found income grew more unequal almost continuously except during the economic recessions in 1.

Dot- com bubble), and 2. The Great Divergence differs in some ways from the pre- Depression era inequality. Before 1. 93. 7, a larger share of top earners income came from capital (interest, dividends, income from rent, capital gains). After 1. 97. 0, income of high- income taxpayers comes predominantly from labor: employment compensation.[5. Until 2. 01. 1, the Great Divergence had not been a major political issue in America, but stagnation of middle- class income was. In 2. 00. 9 the Barack Obama administration White House Middle Class Working Families Task Force convened to focus on economic issues specifically affecting middle- income Americans.

In 2. 01. 1, the Occupy movement drew considerable attention to income inequality in the country.[citation needed]CBO reported that for the 1. As a result of that uneven income growth," the report noted, "the share of total after- tax income received by the 1 percent of the population in households with the highest income more than doubled between 1. The share of income received by the top 1 percent grew from about 8% in 1. The share received by the other 1. According to the CBO,[5.