Originally Published: April 4, 2013 9:56 p.m.
In 1929, prior to the Great Depression, the top 10 percent of earners accrued half of our nation's income. The market crash in October 1929 and the resulting economic depression left one in four unemployed by 1933. Following the crash, taxes were increased on high-income earners. This period of elevated tax revenues between 1940 and 1981 correlated exactly with the flourishing of a cherished American institution, the middle class. During this era of shared prosperity, the rich, the poor and the middle class all doubled their real income in tandem.
Tax rates on high income have been much lower since 1982. Some politicians believe that reducing these tax rates stimulates the economy, resulting in job creation. They assure us the wealth will "trickle down" to middle class workers.
According to the Congressional Budget Office, since 1981, the real median income of middle class workers has risen from $36,500 to $50,000 (in today's dollars). This increase of just 1 percent per year was a paltry reward for 30 years of superb worker productivity increases. It was merely a trickle.
Between 1982 and today, the richer you were the richer you became. Yet many in the middle class went into debt.
In 2007, the wealthiest 10 percent again earned nearly half of our nation's income. This was identical to the level of income inequality last seen in 1929. Again, our economy became unstable and again equity markets and consumer confidence crashed.
Today, the middle class is diminished. An elite minority owns most of our nation's wealth. Has any trickled down? Yes, some did. But it was merely a trickle.