US Poorest Fifth's Income Share Falls to 7.4% in 2022 as Redistribution Loses Ground
Updated
Updated · The Guardian · Jun 21
US Poorest Fifth's Income Share Falls to 7.4% in 2022 as Redistribution Loses Ground
1 articles · Updated · The Guardian · Jun 21
Summary
CBO data show the poorest 20% of US households received 7.4% of national income in 2022, down from a multi-decade high of 8.2% in 2020.
Taxes and transfers had lifted that group's share to 7.9% by 2016 under Barack Obama, but the richest 1%'s after-tax income share later climbed to 13.2% by the end of Donald Trump's first term from 12.5%.
The report argues redistribution remains weak because US tax policy often favors higher earners and the richest households can minimize taxable income; Berkeley researchers found the 400 richest Americans pay lower effective tax rates than average workers.
That leaves the US with one of the OECD's highest inequality levels and less reduction from taxes and transfers than almost every other member, even as the top 1% hold nearly 32% of net worth.
With the ultra-rich living off tax-free loans against their stock, is it time to redefine what we consider 'income'?
If the 'top 1%' is a revolving door of people, does this change how we should address wealth inequality?
As AI accelerates wealth concentration, could it also be used to design a more fair and efficient economic system?
The Widening Wealth Gap in America: How Policy Choices Since 1979 Have Concentrated $80 Trillion at the Top
Overview
The report reveals that the income share for America’s poorest citizens has declined, even as overall means-tested transfers have increased. This is largely due to policy decisions that have shifted a growing portion of benefits, like Medicaid, toward the middle class, reducing the impact on the most vulnerable. Federal policies play a major role in shaping income distribution, and many older adults and low-income groups rely on programs such as Social Security, Medicare, Medicaid, and SNAP for stability. These trends highlight how deliberate policy choices have contributed to a widening economic gap in the United States.