The Income of the Top 1%

Megan McArdle points out that the income share of the top 1% has declined sharply in the past couple of years:

This isn’t surprising. Income inequality increases whenever the economy improves; it decreases during recessions. There is only one known way to decrease inequality—and it’s plainly undesirable.

What about the 1940s and 1950s? Liberals are looking back at those decades fondly. They seem to have been times of economic growth and relative equality. But that’s misleading. The top tax rates during those years was over 90%.

The wealthy found ways of avoiding taxable income. That doesn’t mean there was less inequality; it just means that less of it was exposed to the taxman.

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