Tuesday, June 7, 2011

Chart of the Day

Barry Ritholtz highlights a database at the Paris School of Economics, which allows comparison of income inequality across nations.  This chart demonstrates how the Great Depression caused nations to address income inequality, and how the U.S., unlike many other developed nations, has veered away from the policies put in place after the Depression to limit inequality, mainly very progressive taxation:


As you can see, the spike from trend begins exactly after the Income Tax reform of 1986, which cut the top marginal rate to 28%.  After the Bush 41 and Clinton tax increases, the percent of income made by the top 1% levels off until the tech bubble, the drops with the popping of the bubble, and soars again as the effects of the Bush 43 tax cuts take hold.  Currently, the top 1% of earners get twice as high of a percentage of total national income in the United States than they do in France, Australia and Japan.  I don't think this is healthy.

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