A couple of interesting charts

From the Congressional Budget Office (Hat tip Boots and Sabers). The first one:

Average Federal Tax Rate by Income Quintile, 1979-2007

Caption:

The pattern of average tax rates has varied over time. The lowest three income quintiles have seen steady declines in their average rate. The tax rate on the fourth quintile was flat over most of this period, before declining in the early part of this decade. The tax rate on the top quintile has fluctuated more, with periods of increases and decreases.

It’ll be interesting to see that same chart ten years from now. Notice how the lowest quintile rises until the early Reagan years, then rises again in Bush I’s term and at the end of Clinton’s term. Notice, too, how the next three quintiles are much flatter overall than the lowest one (which generally trends down) until the Dubya administration, when they all head south. And the highest quintile – which should be the least vulnerable to small changes – is far less stable than the others.

The next one:

Cumulative Change in Real After-Tax Average Income

Caption:

Growth in after-tax income has been uneven across the income distribution, with upper-income groups seeing more rapid growth than lower-income groups. Much of that increase reflects the pattern of before-tax income growth.

This one might be a little misleading, because it measures change since 1979: obviously, the five quintiles didn’t have equal income that year. Also because it measures real income, meaning it’s adjusted for inflation. So all five quintiles have grown more than shown here: this shows growth against inflation. In other words: purchasing power.

Look at how wildly income growth fluctuates in the top quintile. It’s important to remember that this measures growth, so the upper 1% was still experiencing rapid income growth during down economies, but still. While the lower three quintiles saw regular growth the whole way, the highest quintile was all over the place.

No conclusion drawn, here. I just think it’s interesting.