What did the Congressional Budget Office report find about US income inequality?

The CBO report found a dramatic increase in US income inequality from 1979 to 2022, with the top 1% doubling their income share while the middle class lost ground.

What are the main drivers of income inequality identified by the CBO?

The CBO identified realized capital gains from market income as a primary driver of the widening income inequality in the United States.

How has the middle class been affected by income distribution changes since 1979?

The middle class has seen its share of income after taxes and transfers decrease by 6 percentage points between 1979 and 2022.

Home / Business and Economy / US Wealth Gap Widens Dramatically: Top 1% Doubles Share

US Wealth Gap Widens Dramatically: Top 1% Doubles Share

23 Jan

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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.

US Wealth Gap Widens Dramatically: Top 1% Doubles Share

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.