Data on income inequality from the CBO do not extend past 2003 so we haven't been able to say too much about changes in the income distribution since then. However, new data reviewed by the Center on Budget and Policy Priorities overcomes this and allow changes in the income distribution between 2003 and 2004 to be examined. The data show that there was a large increase in income concentration between 2003 and 2004:
New Data Show Extraordinary Jump in Income Concentration in 2004, by Aviva Aron-Dine and Isaac Shapiro, CBPP: Economists Thomas Piketty and Emmanuel Saez have recently made available an updated version of their groundbreaking data series on U.S. income inequality. The data are unique because of the detailed information they provide regarding income gains at the top of the income spectrum, and also because they extend back to 1913. ... The Piketty and Saez data offer the first real snapshot of income trends among those at the pinnacle of the income spectrum in 2004. The data show that income gains between 2003 and 2004 were particularly large for those at the very top of the income spectrum, resulting in a nearly unprecedented one-year increase in income concentration...:
- From 2003 to 2004, the average incomes of the bottom 99 percent of households grew by less than 3 percent, after adjusting for inflation. In contrast, the average incomes of the top one percent of households experienced a jump of almost 17 percent, after adjusting for inflation. (Census data show that real median income fell between 2003 and 2004. ...[T]he 3 percent rise among the bottom 99 percent seems to largely reflect gains by households in the top quintile of the income spectrum...)
- The top one percent of households garnered 36 percent of the income gains in 2004.
- This disparity produced an exceptional jump in income concentration in 2004. The share of the pre-tax income in the nation that goes to the top one percent of households increased from 17.5 percent in 2003 to 19.5 percent in 2004. Only five times since 1913 (the first year that this data set covers), and only twice since World War II has the top one percent’s share risen by as much in a single year (in percentage point terms). Each percentage point of income is equivalent to $68 billion in 2004.
- The share of total U.S. income that the top one percent of households received in 2004 was greater than the share it received in any prior year since 1929, except for 1999 and 2000.
Income gains were even more pronounced among those with the very highest incomes. The incomes of the top one-tenth of one percent of households grew more rapidly than the incomes of the top one percent of households. The share of the national income received by the top one tenth of one percent of households increased by 1.3 percentage points from 2003 to 2004; in other words, more than half of the increased share of income going to the top one percent of households actually went to the top one-tenth of one percent of households. ...
The new data from Piketty and Saez are fully consistent with other indicators that suggest the distribution of the economic gains from the current recovery has been very uneven. In May 2006, CBO suggested that continued growth in income inequality may be one cause of the recent rapid growth in federal revenues. Increases in income inequality boost revenue growth, in part because high-income households are subject to higher federal income tax rates than are households of lesser means...
Supply-side tax cuts consistent with trickle up economics seem to be working well, though trickle might be a bit mild as a description.