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US Wealth Gap Widens Dramatically: Top 1% Doubles Share
23 Jan
Summary
- Top 1% income share before taxes doubled from 9% to 18% between 1979 and 2022.
- Middle quintiles saw their after-tax income share decrease by 6 percentage points.
- Capital gains are identified as a primary driver of this increasing inequality.
A comprehensive report from the Congressional Budget Office (CBO) highlights a significant economic transformation in the United States over 43 years, from 1979 to 2022. The data indicates a substantial widening of the income gap, with the wealthiest households experiencing dramatic growth while the middle class has seen its economic standing diminish.
The report details that the top 1% of households saw their share of national income before taxes and transfers more than double, rising from 9% in 1979 to 18% in 2022. Concurrently, the share of income captured by the lowest quintile decreased slightly. This trend of income compression was most pronounced in the middle segments of the economy.
Even after accounting for taxes and government transfers, the middle three income quintiles experienced a 6 percentage point reduction in their share of income. In contrast, the after-tax income share for the top 1% doubled, moving from 7% to 14%. The report identifies realized capital gains as a key market income driver of this growing disparity.
