President Obama will reportedly focus much of his State of the Union speech on addressing inequality and mobility in America. Undoubtedly, these issues will generate a considerable amount of rhetoric by pundits and politicians on both sides of the aisle in the days ahead. Much of this rhetoric will not be supported by data or facts.
In order to bolster this discussion with data, we’ve summarized some of the recent work done on inequality and mobility by the Congressional Budget Office and the IRS. Links are provided to the original source material.
Highlights of these reports include:
Inequality: CBO data shows that inequality today is slightly higher than the average of the past thirty years but less that it was during the last two years of the Clinton administration.
Progressivity: According to the CBO’s progressivity index, the federal tax code is as progressive today as it has been at any time during the past thirty years.
The Top 1 Percent: The top 1 percent continues to pay a larger share of the federal income tax burden than the bottom 90 percent combined.
Redistribution: Using 2006 data, CBO found that tax and spending policies combined to redistribute $1.2 trillion in income from the top 40 percent of non-elderly households to the bottom 60 percent of non-elderly households.
Mobility: IRS panel data that tracked the same group of taxpayers between 1999 and 2007 showed that Americans can move from one economic group to another fairly quickly.