The Politics of Widening Income Inequality in the United States, 1977 to 2014

Abstract

This paper examines the impact of partisanship on growing inequality in the United States from 1977 to 2014. Drawing on Piketty and Zucman’s data on the rising share of income flowing to the top one percent and falling share of income flowing to the bottom 50 percent, we tested the impact of Republican or Democratic control of the presidency and/or Congress on the path of that redistribution. There was no statistically significant association between party control of either branch of government and the path of redistribution of national income on a pre-tax basis, suggesting that economic factors drove pre-tax redistribution. However, there were strong associations between party control and the path of redistribution of post-tax income. When Republicans held the presidency, controlled Congress, the rising share of post-tax income going to the top one percent accelerated, and the falling share going to bottom 50 percent also accelerated. The result was the opposite when Democrats held the presidency, controlled Congress, or both: The increase in the top one percent’s rising share of post-tax national slowed, as did the decline in the bottom 50 percent’s share of post-tax national income.

Keywords: Inequality, Incomes, Partisanship, Post-Tax Income, Pre-Tax Income

JEL Classification: H10, H20, H22, H30