June 23, 2012 by David K. Sutton
Income Inequality: Top One Percent Share Of Total Pre-Tax Income, 1913-2007
There will be naysayers who cite causality when they see a chart like the one below, and that is fine. I agree, we cannot directly correlate the top one percent’s share of total pre-tax income with all things that ail this country, but is anyone going to make the case that income inequality of this magnitude is healthy for the future of the United States?
In 1928, the top one percent’s share of pre-tax income was 23.9%. What followed was the Great Depression. In the aftermath, New Deal policies stabilized the economy and helped build a robust middle class through much of the rest of the 20th century. During this time the top one percent’s share of pre-tax income dropped to a low of 8.9% in 1976.
In 2007 the top one percent’s share returned to its pre-depression level, a result of relaxed regulations and extensive tax cuts through the 1980s, 90s and 00s. We know what followed, the “Great Recession,” the worst economic downturn since the Great Depression.
In the aftermath of the Great Recession we’ve done nothing that comes close to resembling the New Deal. It’s business as usual. Nobody was punished. Nobody went to jail. And the solution to fix the economy from Republicans? More of the same de-regulations and tax cuts that got us into this mess in the first place. We are doomed to repeat mistakes when we fail to the learn lessons from failures, or in this case, when we assume we no longer need to heed lessons from the past.