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The Distribution of Household Income in US, 2014 – Average of $19,000 for the lowest quintile and of $281,000 for the highest quintile and getting worse

In 2014, average household income before accounting for means-tested transfers and federal taxes was $19,000 for the lowest quintile and $281,000 for the highest quintile. After transfers and taxes, those averages were $31,000 and $207,000.

What Are the Trends in Household Income and Income Inequality?

According to the agency’s estimates, average household income before transfers and taxes was almost 60 percent higher in 2014 than it was in 1979 in real (inflation-adjusted) terms—an average growth rate of 1.3 percent per year. That growth, however, was not the same across the income spectrum. Income growth among households in the bottom 80 percent of the income distribution was less than half that overall growth rate—26 percent for households in the lowest quintile and 28 percent for households in the middle three quintiles. Meanwhile, among households in the highest quintile, average income in 2014 was 95 percent higher than it was in 1979. Because of those differences in cumulative growth rates, income inequality was greater in 2014 than it was in 1979.

From 1979 through 2014, for households in the lowest income quintile, cumulative growth in income after transfers and taxes was significantly greater than cumulative growth in income before transfers and taxes—69 percent versus 26 percent. That faster growth was attributable both to the expansion of means-tested transfers (especially Medicaid) and to a reduction in federal taxes—the latter largely the result of the expansion of refundable tax credits provided through the individual income tax.

Chosen excerpts by Job Market Monitor. Read the whole story at The Distribution of Household Income, 2014 | Congressional Budget Office

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