, Columnist
Tax Cuts Don't Always Make Inequality Worse
Some of the biggest income gains for the top 1 percent in the U.S. have come when taxes were raised.
Enemy of the rich.
Photographer: Pradeep Gaur/mint/getty imagesThis article is for subscribers only.
Why did the incomes of top earners rise so much after 1980? One reason was the boom in asset markets, which increased capital income from stocks and housing. But much of the gain was because the rich earned a lot more in salaries, bonuses and other labor income.
To cite a well-known example, chief executive officers in the late 1970s got paid a little more than 20 times what the average worker did; since the mid-1990s, it’s been more like 200. Here, from a paper by several economists who study inequality, is a graph of the income share going to the top 1 percent in the U.S.: