Income Distribution: Rich & Richer

The Congressional Budget Office (CBO) has released a report that breaks down income into percentile categories that provide a sense of the difference between the merely rich and the truly rich. It comes in a a report, “Historical Effective Tax Rates, 1979 to 2005: Supplement with Additional Data on Sources of Income and High-Income Households,” (.pdf) that is ostensibly about tax rates (and the data about that are interesting too), but I am always curious about income breakdowns, and it provides those too.

Here’s a quick and dirty table I prepared that presents a selection of some of the data from the report linked above:

Based on these data, here’s a graph of average income:

And here’s a graph of two of the sources of income, wages & capital gains (data on other income sources are included in the full report linked above):

As indicated above, the primary motivation of the report was to provide information regarding tax rates, and there are multiple tables in the report that give that information. A brief quote provides a sense of the degree to which those at the high end not only earn a significant amount of income, they also pay a significant amount of taxes:

The half-percent of the population with the highest income received 14.7 percent of total household income before taxes and paid 22.6 percent of total federal taxes in 2005. People at the top 0.01 percent of the income scale received 4.2 percent of total income and paid 6.5 percent of total federal taxes in 2005. The half-percent of the population with the highest income paid 31.5 percent of federal individual income taxes, while the top 0.01 percent paid 8.0 percent of individual income taxes in 2005.