Southern Disparity

A new report from the nonpartisan Congressional Research Service documents the growing gap between rich and poor — and how U.S. tax policy is deepening the divide.

Percent by which average after-tax income, adjusted for inflation, grew between 1996 and 2006, according to the new report: 25

Percent change in after-tax income for the poorest fifth of tax filers during that period: -6

Average income for those bottom earners in 2006: $8,461

Percent change for the middle fifth of tax filers: +11

Average income for those middle earners in 2006: $39,301

Percent change for the top 0.1 percent of tax filers: +96

Average income for those top earners in 2006: $5,651,740

Percent increase in before-tax income inequality from 1996 to 2006 (as measured by the Gini coefficient) : 9

Percent increase in after-tax income inequality: 11

Percent by which taxes reduced income inequality in 1996: 5

In 2006: less than 4

Of the 10 states with the greatest income inequality, number in the South: 5*

Percent of the annual income earned by the top 0.1 percent that comes from wages and salaries: 18.6

Percentage-point increase in proportion of income from capital gains — investments in stocks, bonds, real estate and other assets — for the top 0.1 percent from 1996 to 2006: 6

Rank of capital gains among the biggest contributors to the increase in overall income inequality: 1

Year in which the Bush administration cut the capital gains tax from 20 to 15 percent: 2003

Number of times since then that this tax cut has been extended: 2

Percentage rate to which President Reagan increased the capital gains tax as part of his 1986 tax reform plan: 28

 

* New York is the top state in terms of income inequality, followed by Alabama, Mississippi, Massachusetts, Tennessee, New Mexico, Connecticut, California, Texas and Kentucky.

Visit the FacingSouth website for some of the region’s best environmental, economic and political reporting.

###
Sue Sturgis

Sue Sturgis

Sue Sturgis joined the Institute for Southern Studies in November 2005 as director of the Institute's Gulf Coast Reconstruction Watch, a project to document and investigate the post-Katrina recovery. A former staff writer for the Raleigh News & Observer and Independent Weekly (Durham, N.C.), Sue directs and regularly contributes to the Institute's online magazine, Facing South, with a focus on energy and environmental issues. Sue is the author or co-author of five Institute reports, including Faith in the Gulf (Aug/Sept 2008), Hurricane Katrina and the Guiding Principles on Internal Displacement (January 2008) and Blueprint for Gulf Renewal (Aug/Sept 2007). Sue holds a Masters in Journalism from New York University.