The nonpartisan Congressional Budget Office (CBO) recently released a report analyzing household income in the US from 1979 through 2014. Among other things, the report documents trends in US income inequality. The CBO summarizes its findings on inequality in the following chart, which uses the Gini coefficient as a measure of income inequality. The Gini coefficient values range from zero (the most equal distribution) to one (the least equal distribution).
The line labeled “Based on Income After Transfers and Taxes” is the one that matters. That’s income after accounting for government programs like Medicaid, Supplemental Nutrition Assistance Program (“food stamps”), Supplemental Security Income, and the Earned Income Tax Credit. What the chart shows is that US income inequality peaked around 2007.
Yes, we could do better - but at least things aren’t getting worse.
The Distribution of Household Income, 2014 Congressional Budget Office. March 2018