JEC Press Release Touts Flawed Inequality Measure

Doing the work of his moneyed constituency, Joint Economic Committee ranking member Rep. Jim Saxton (R-NJ) issued a press release this week proclaiming that inequality in American remains unchanged since 2001. Citing the Census Bureau's latest Gini Coefficient, a numerical measure of income inequality, Saxon warns Congress about enacting any legislation aimed at curbing inequality. "Despite all the discussion about income inequality, the fact is that it hasn't changed in recent years, according to the Census Bureau measure...Congress should consider this fact before acting on the assumption that income inequality is surging." Indeed. Congress should consider the Census statistic...because it's critically flawed. Center on Budget and Policy priorities explains: The Census data fail to capture a substantial amount of income at the top of the income scale, in part because the Census Bureau records income only up to certain specified levels. For example, earnings above $999,999 are not counted; if an individual has a job paying $5 million, his or her earnings are recorded by Census as $999,999. In addition, the Census data leave out all capital gains income, which flows disproportionately to the most affluent households. [Research] which incorporates Internal Revenue Service data that reflect actual incomes at the top of the income scale finds that the top one percent of households received nearly half — 49 percent — of the overall increase in household income that occurred in 2005. (Moreover, the top one percent of households received 19.3 percent of all income in 2005. This tied with 2000 as the largest percentage going to the top one percent of households since 1929.)
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