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You know the old saying, “The rich get richer and the poor get poorer?” That adage sums up life in the United States.
According to a new report by the Paris-based Organisation for Economic Co-operation and Development, the top 1 percent of Americans now receive at least 20 percent of all pretax income in the U.S., which is double what they got in 1980.
While other countries have experienced income inequality issues of their own, the report said, “The rise was most spectacular in the United States.” The report noted this staggering statistic: 80 percent of total income growth in the U.S. between 1975 and 2007 was captured by the top 10 percent of income earners.
The super-rich are getting even richer, according to the report. The share of total income of the top 0.1 percent of income earners in the U.S. soared from 2 percent in 1980 to more than 8 percent in 2010.
“By comparison, the top 0.1 percent account for 4 to 5 percent of total pretax incomes in Canada, the United Kingdom and Switzerland, and close to 3 percent in Australia, New Zealand and France,” OECD said.
The Huffington Post noted that the super-rich getting richer might not be so bad, except:
It doesn’t appear the nation’s “wealth creators” are creating much wealth for anyone else. According to the OECD’s report, the pretax, inflation-adjusted incomes of the bottom 99 percent have only grown by an average of 0.6 percent per year in recent decades. Add in the top 1 percent, and the country’s income growth rate jumps to 1 percent.
Why so much income inequality? The OECD report pinpointed several factors, including the change in compensation practices for executives, and trends in taxation, like the reduction of progressive income and inheritance taxes.
CBS News said the OECD, which aims to find policy solutions to ensure a more equal distribution of resources, has a recommendation: “raising taxes on the rich by reducing tax deductions that benefit top earners and taxing all compensation, including capital gains, as ordinary income.”