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October 5 2012

Apparently it’s Not as Lonely at the Top as Some Say

Vicki E. Alger

A recent study by the Cato Institute’s Alan Reynolds says a leading measure of economic inequality is flawed—and with it the redistributionist government “solutions.”

“It has become commonplace to use top 1 percent shares of market income as a shorthand measure of inequality,” says Reynolds. But here are just two of the problems.

First, the 23 percent income growth figure applied to the top 1 percent from 1979 to 2010 includes transfer payments and employer-financed benefits. Second, income share estimates of the top 1 percent are based on pre-tax earnings, and then those estimates are used to show that the 1 percent don’t pay enough taxes.

As Reynolds concludes, “After reviewing numerous data sources, I find no compelling evidence of any large and sustained increase in the inequality of disposable income over the past two decades.”

Independent Women’s Forum’s mission is to improve the lives of Americans by increasing the number of women who value free markets and personal liberty. Sister organization of Independent Women’s Voice.
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