The rich just keep getting richer -- not only by gobbling up more income, but also by paying less in taxes. That means less support for the poor, who are getting increasingly poorer relative to the top one percent.
One chart in a new study of income inequality in developed nations, published by the National Bureau of Economic Research, puts this in stark relief. It shows that the more top tax rates are cut, the greater the share of national income that is mopped up by the wealthiest citizens.
And of course perhaps no country illustrates this better than the United States, which is at the extremes of income inequality and tax cuts for the wealthy, as you can see in the chart below. The only other nation that even comes close is the United Kingdom, which was hijacked by "trickle-down economics" at about the same time as the U.S., back in the 1980s under Reagan and Thatcher. (Story continues below infuriating chart.)
The U.K. has cut top tax rates more aggressively than the U.S. in the past few decades, but the U.S. still has a lower top marginal income tax rate -- 35 percent, compared to 50 percent in the U.K. And income inequality is far worse in the U.S., where the top one percent of households gets a fifth of all the nation's income. In the U.K., the income share of the top one percent is less than 15 percent.
Slashing top tax rates has had none of the positive effects on economic growth that the supply-side economists promised us, the NBER paper points out. Instead, it has just worsened income inequality.
keyboard shortcuts: V vote up article J next comment K previous comment