TAX CUTS FOR THE RICH ARE FOR A SMALL GROUP

“Ever since income inequality began its sharp rise in the 1980s, one favorite conservative excuse has been that it doesn’t mean anything, because economic positions change all the time. People who are rich this year might not be rich next year, so the gap between the rich and the rest doesn’t matter, right?

“Well, it’s true that people move up and down the economic ladder, and apologists for inequality love to cite statistics showing that many people who are in the top 1 percent in any given year are out of that category the next year.

“But a closer look at the data shows that there is less to this observation than it seems. These days, it takes an income of around $400,000 a year to put you in the top 1 percent, and most of the fluctuation in incomes we see involves people going from, say, $350,000 to $450,000 or vice versa. As one comprehensive survey put it, ‘The majority of economic mobility occurs over fairly small spans of the distribution.’ Average incomes over multiple years are almost as unequally distributed as incomes in any given year, which means that tax cuts that mainly benefit the rich are indeed targeted at a small group of people, not the public at large.”

Krugman, Paul, ‘On Invincible Ignorance,’ Op-Ed column in The New York Times, March 21, 2016. [Paul Krugman is a winner of the Nobel Prize in economics.]