From 2009 to 2010, the top 1% of earners enjoyed an 11.6% rise in income while the rest of the workforce saw a gain of just 0.2%.
Renewed gains at the top are not surprising. Declines in high incomes during the recession were driven by a collapse in stock prices, which have since roared back to their levels of before the crisis. By contrast, salary income has scarcely budged. Excluding capital gains, the top 10% of earners captured a near-record share of income in 2010. More increases may follow.
Mr Saez argues that there was little reason to expect enduring change from the Great Recession. The Depression hurt the rich, but it was the regulatory and tax changes that followed which made a lasting impact on income distribution. Regulatory reform in the wake of the latest crash has been far more restrained.
Despite some Democrats’ rhetoric, big new tax increases are highly unlikely. Mr Obama proposes to cut the deficit by returning the top marginal income-tax rate to the 39.6% level of the late 1990s. Between 1932 and 1944, by contrast, the tax rate on top incomes rose from 25% to 94%. Such confiscatory rates are hard to imagine now. But the resumption of the pre-recession trend may change the political debate.
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