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.

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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.