Under President Obama, income inequality improved—and all it took was one thing

By Mark Sumner
Thursday Jun 09, 2016 · 12:43 PM EDT

Why has income inequality been growing so quickly in the last few decades, and how can it be addressed? Really, it's not a great mystery.

Income inequality declined abruptly in 2013 after President Obama and Congress negotiated an increase in taxes on the wealthiest Americans, according to new federal data.

Income inequality soared when taxes on the rich were cut, cut, and cut again. In particular, reducing taxes on capital gains made it possible for those at the top of the income ladder to reward themselves without worrying about paying their fair share. The change that went into effect in 2013 was primarily a 3.8 percent increase in the tax on capital gains. That was enough to tip the long-growing rate of inequality into decline.

"That decrease in income inequality stemmed primarily from the higher rates faced by high-income taxpayers in that year, which made the federal tax system the most progressive it has been since the mid-1990s," the nonpartisan Congressional Budget Office wrote in the report released Wednesday.
Republicans continue to argue that cutting taxes for the rich will stimulate the economy, but there’s no evidence that this is true. In fact, we have decades of evidence that it’s not true. Cutting taxes at the top only promotes more money staying at the top, and limits both jobs and compensation for the working and middle classes.  Donald Trump’s proposed 25 percent tax rate for the wealthy would result in an instant growth of inequality measured in the hundreds of billions.

The plan for taxation that Donald Trump put forward in the fall would drastically increase inequality by reducing taxes on the rich.

http://www.dailykos.com/stories/2016/6/9/1536615/-Under-President-Obama-income-inequality-improved-and-all-it-took-was-one-thing