By Steven Rosenfeld
Analysis of two decades of income tax trends also find the rich consume more.
A new study by a team of economists in academia and the government has concluded that economic inequality is a permanent—not temporary—feature in the United States, based on an analysis of 350,000 federal income tax returns between 1987 and 2009.
“For household income, both before and after taxes, the increase in inequality over this period was predominantly, although not entirely, permanent,” the highly technical report concluded. “We also find evidence that the U.S. federal tax system helped reduce the increase in household income inequality; but this attenuating effect was insufficient to significantly alter the broad trend toward rising inequality.”
The study by economists at two state universities, the Federal Reserve and U.S. Treasury Department, also found, not surprisingly, that the wealthiest Americans consume more than less well-off people, and that disparity causes poorer Americans to suffer as a result.