Deeply insightful graphic from Chuck Marr (via Mark Thoma) highlighting the "stunning shift in income" has taken place in US, "from the middle class to those few at the very top of the income scale".
Inequality in US has widened so dramatically that in comparison to the 1979 income distribution, the average middle-income American family had about $9,000 less after-tax income in 2007, and an average household in the top 1 percent had $741,000 more.
In 1979, the middle 20% of Americans had more than twice as large a share of the nation’s total after-tax income as the top 1%, whereas by 2007, the top 1%'s slice of the economic pie had more than doubled and in fact exceeded the middle class’s slice, which had shrunk. Fully two-thirds of the income gains in the last economic expansion (2001-2007) flowed to just the top 1 percent.
The US Census Bureau reports that the top-earning 20% of Americans (those making more than $100,000 each year) received 49.4% of all income generated in the United States, compared with the 3.4% earned by those below the poverty line. That ratio of 14.5-to-1 was an increase from 13.6 in 2008 and nearly double a low of 7.69 in 1968. It also found that the international Gini index for the US income inequality was at its highest level since the Census Bureau began tracking household income in 1967.
As Mark Thoma asked, "Is it possible for an outcome to be equitable when, as in recent decades, nearly all of the gains from growth accrue to one class?". In the face of such overwhelming evidence, the advocacy of Tea Party movement to lower taxes is at best dubious.