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It would appear the income of the top 1% went up roughly 10% in 2004, versus more like a 3% rise in the top 50%. If this interpretation of mine is accurate (and I'd like to spend a lot more time with the data, but just can't right now), my hunch is it is because of the 2001 tax changes to capital gains law, coupled with a stock market that had risen since the 2000/2001 crash, allowing some to sell stock and take capital gains.
Personally, would like to see the capital gains data separate from the income data. I feel rather strongly that low capital gains taxes are necessary for a robust economy, as I've commented elsewhere on this thread. But if you have low capital gains, it does mean more after tax income for the wealthy, who tend to own the assets--so it works against income distribution goals. But this is a case where the benefits of not having constraints on the movement of capital, so that capital goes to the most promising investments, has definite positive impact on all income classes--imho.
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