A Congressional Budget Office study has claimed that between 1979 and 2007 after-tax income for richest households grew substantially more than it did for others.
Let's look at what is not happening. The poor are not getting poorer because the rich are getting richer. Gary Burtless of the Brookings Institution says living standards have improved for the poor and middle-class since 1980, in comments he provided for an American Enterprise Institute study, Oct. 25. He notes real income and consumption for middle and bottom income levels improved. Indeed, the poor and the middling are getting richer, not poorer.
The unusual cases in which middle-income living standards stopped rising involve "a fairly brief period — say, the last five or ten years, when living standards have been affected by a steep recession and anemic recovery," Mr. Burtless writes. Alternatively, declining living standards over two or three decades, involve a trend "within fairly narrow slices of the population — unmarried men in their 20s and early 30s who have below-average schooling...or groups that have been particularly hard hit in the recent slump."
Next, many of those at the bottom don't stay there. They move up. Many people at the bottom today are not the same people who used to be there.
A large segment of the richest also no longer are the richest. University of Michigan (Flint) economist Mark Perry reports on a study tracking individual households, for even as brief a period as 2001-2007. Fifty percent moved from one quintile to another. Forty-four percent of households in the lowest quintile in 2001 moved into a higher quintile six years later. Thirty-four percent in the top quintile fell into lower quintiles.
This upward — and downward — mobility refutes the claim tax-rate reductions and deregulation in recent decades helped only America's richest. Many of the richest no longer are, and many of today's richest didn't used to be. There's no reason to assume this mobility is changing.
The Tax Foundation finds "no clear trend" since the 1990s of income distribution becoming more unequal. But there clearly is evidence "federal taxes have become more, not less, redistributive over the last three decades."
The CBO study plays into the hands of advocates for redistributing wealth. But on what moral basis does one person demand what another has, simply because he has more of it? When will that appetite be satisfied? When the top 1 percent pay 99 percent of all taxes and the bottom 99 percent of earners pay none?