David Cay Johnston reports on the latest data on income (2005), which shows the upward redistribution of income is continuing. While I don't doubt that this story is basically true, I think that the IRS data is somewhat problematic for two reasons. First, incomes at the very top are extremely volatile because they depend hugely on stock prices. This is partly a story of capital gains, but also due to the timing for the decision to cash in stock options, which will often not appear as capital gain income. In this case, our top 0.01 percent in any given year will be the people who happened to get a really big haul in that year. This is interesting, but ideally we would want to know what things looked like for the top 0.01 percent over a longer (e.g. 5 year) period. My guess is that most of the top 0.01 percent are only in that bracket for a single year. For the other four years they probably fall back to the top 0.1 percent (downward mobility). The other problem is that reported income for the very rich will depend not only on their timing in realizing capital gains, but also on the decision of corporations to pay out dividends. If corporations opt to pay out a larger share of their profits in dividends (which they have, probably in response to the dividend tax cut), then we would expect stock prices to rise less rapidly (lower retained earnings and fewer share buybacks), but more dividend income to show up on people's tax returns. Anyhow, I think the basic story reported in the NYT article, that a larger share of income is going to those at the top and most workers are seeing very little of the benefit of economic growth, is certainly true (we have the wage data). I just would advise caution in analyzing the shares of income going to the extreme rich. It ain't easy.
--Dean Baker