Income Mobility is Alive and Well in the U.S.

January 29, 2009

In the blog posting below, “IRS Report Shows the “Rich” Are Not Monolithic,” Scott Hodge describes new data from the IRS on the top 400 taxpayers that shows that income dynamics are alive and well in the United States. These data reflect the findings from a more detailed and comprehensive study on income dynamics released by the Treasury Department in November 2007, Income Mobility in the U.S. from 1996 to 2005. The Treasury Report analyzed the income dynamics of the taxpaying population from 1996 through 2005 and found that roughly one half those in the bottom quintile moved to a higher quintile within ten years, a very common finding in income mobility studies. But the Treasury study also examined those at the very top of the income distribution—the top 1/100 of one percent (i.e., the top 11,700 taxpayers). In 1995, this group’s income averaged $17.5 million and its median income was $11.6 million. Perhaps the most interesting point was that only 25 percent of those who started in this group remained at these lofty levels after ten years; that is, roughly 75 percent moved back down the income distribution.

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