That conclusion is by no means settled, and this article will lay out the best arguments of both sides – some of those arguments voiced by ordinary Americans. But what now seems established is that income disparity has risen in recent years within the United States, as well as within other economically advanced nations.
An overview for the US: Over the past three decades, average incomes have grown for typical households at all parts of the earnings scale, but earnings have truly soared for the rich.
Average income for a household in the top 1 percent has more than tripled, from $350,000 in 1979 to $1.3 million in 2007, according to data tracked by Lane Kenworthy, a University of Arizona sociologist drawing on numbers crunched by the Congressional Budget Office. These figures are adjusted for inflation and look at household income after taxes and any transfer payments from the government.
By comparison during those three decades, households in the middle 60 percent saw average real income go from $44,000 to $57,000. For the bottom 20 percent, this gauge shows average household income rising from $15,500 to $17,500.
President Obama has pitched a "fair share" approach to the economy as a central part of his re-election campaign. In his newly released budget, the president proposes, for example, that investment dividends be taxed at the same rate as wage income for high earners. And he argues that, down the road, one principle of tax-code reform should be that the very rich pay at least 30 percent of their income in federal taxes.
The US tax code is an inevitable part of any public debate over issues related to inequality and economic fairness. But economists say past tax policies, which have allowed the wealthy to keep more of their income, aren't the only reason that income gaps have widened.