A frequently quoted statistic by those trying to justify the huge disparity in U.S. wealth is that the top 10 percent pays 70 percent of federal income taxes. This is a classic example of a true but meaningless statistic because this situation can happen with all sorts of income and tax-rate scenarios. These include some with huge income disparities and with flat tax rates that are popular with Republican presidential candidates.
Some meaningful statistics are:
- From 1935 until 1980, the top income tax bracket rate was at least 70 percent, whereas now the top rate is 35 percent; 2. CEOs made 40 times the average wages of workers in 1980, whereas it is almost 400 times today; 3. After-tax income of the top 1 percent grew 275 percent from 1979 to 2007, compared with 65 percent growth for the next 19 percent of the population, 40 percent for the middle 60 percent, and only 18 percent for the bottom 20 percent (Congressional Budget Office report).
Astoundingly, in 2007 the top 1 percent owned 42 percent of the country’s financial wealth (total net worth minus the value of one’s home) compared with only 7 percent for the bottom 80 percent (http://sociology.ucsc.edu/whorulesamerica/power/wealth.html).
Occupy Wall Street is indeed right on.