"A comprehensive new report released by the Congressional Budget Office (CBO) portrays a stark transformation of the American economy over the last four decades, revealing a deepening divide where the wealthiest households have dramatically expanded their economic footprint while the middle class has steadily lost ground. According to the data, which spans from 1979 through 2022, the distribution of national income has skewed heavily toward the very top."
"The report reveals the top 1% of households grew their share of income before transfers and taxes from 9% in 1979 to 18% in 2022, effectively doubling their slice of the economic pie. While the top tier prospered, the rest of the economic ladder struggled to maintain its standing. The CBO found as the top 1% seized a larger portion of market income, the share going to the lowest quintile dropped from 5% to 4%."
"Even after accounting for the stabilizing effects of the safety net and the tax code, the middle class has seen its relative status diminish. The share of income after transfers and taxes held by the 'middle three' income quintiles decreased by 6 percentage points over the 43-year period. Conversely, the share of after-tax income going to the top 1% doubled from 7% to 14%."
From 1979 to 2022 the share of national income shifted strongly toward the top of the distribution. The top 1% increased their pre-tax income share from 9% to 18%, and their after-tax share doubled from 7% to 14%. The 'middle three' quintiles lost about six percentage points of after-tax income, while the lowest quintile's market income share fell from 5% to 4%. Average incomes grew for all groups, but gains concentrated at the summit: the highest quintile more than doubled average income and the top 0.01% saw after-tax income rise more than sevenfold. Realized capital gains disproportionately fueled top-end surges.
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