The Falling Fortunes of the One Percent

The presidential election has given us two myths the rich. First, that their incomes, and income inequality, are at all- highs. Second, that the wealthy pay less taxes than ever, and lower taxes than the of us.

A recent report the Congressional Budget Office, however, suggests that may be false.

Let’s consider income first. 2007 and 2009, after-tax earnings by Americans in the top one percent income fell 37 percent. On a pre-tax basis they fell 36 percent in the period.

That may sound a minor haircut for One Percenters compared to people lost their jobs. But when you into account federal transfers, assistance and taxes paid, the incomes of the 20 percent grew by 3 percent, it fell a modest 2 percent for the middle 20 percent.

In other , the incomes of the top one percent fell 18 times more than the incomes for the middle class the start of the recession.

The result of this big drop the top was that their share of the country's total income fell. In 2007, the top one percent earned 26.7 percent of all after-tax income. In 2009, that portion fell to 22.3 percent.

Inequality, in words, fell during those years. We are now an age of High-Beta Wealth, where the incomes of the One Percent have become more manic and prone wild drops than the rest of country.

And taxes paid? Despite the oft-repeated fact that tax rates the wealthy are at an -time low (which is true), it’s also true that the actual amount paid taxes by the wealthy is higher than before the recession.

The One Percent paid an average effective tax of 28.9 percent on their income — far more than any group, and more than twice average effective rate of the middle class, paid 11 percent on average.

So rich lost more income and paid more of their money in taxes the rest of the population.

This is not an argument taxing the wealthy. And the incomes and tax rates of the wealthy may jumped back since 2009, with the rebound financial markets.

But when politicians and pundits talk the rich just getting richer and paying less taxes, they need to pay closer to the actual numbers.


Adapted and abridged from: CNBC, July 20, 2012.