Income Inequality Data
The Treasury study examined a huge sample of 96,700 income tax returns from 1996 and 2005 for Americans over the age of 25. The study tracks what happened to these tax filers over this 10-year period. One of the notable, and reassuring, findings is that nearly 58% of filers who were in the poorest income group in 1996 had moved into a higher income category by 2005. Nearly 25% jumped into the middle or upper-middle income groups, and 5.3% made it all the way to the highest quintile.Of those in the second lowest income quintile, nearly 50% moved into the middle quintile or higher, and only 17% moved down. This is a stunning show of upward mobility, meaning that more than half of all lower-income Americans in 1996 had moved up the income scale in only 10 years.
Also encouraging is the fact that the after-inflation median income of all tax filers increased by an impressive 24% over the same period.
Income inequality is something I like to keep an eye on. While I believe in a generally laissez-faire economics, I try to keep an open mind at the data, and growing income inequality and mobility stagnation would represent a problem for that theory.
Most people know of course that this is something that is difficult to judge. We see contradictory reports as various ideologues generate numbers using methods that ‘prove’ what they already believe. Passions are high on the subject, an everyone wants to show that their pet theory of economics would promote better social justice outcomes. I am sure I am not immune in that regard. Still, these numbers are a comfort.
