Income Inequality Widens in US: RAND Study Highlights Impact of Tax Cuts

A new RAND Corporation study reveals a stark widening of the income gap in the United States since 1975. The study, titled "Measuring the Income Gap from 1975 to 2023," shows that the bottom 90% of earners have cumulatively lost trillions of dollars due to income inequality. The study's author, Carter C. Price, attributes this largely to Republican tax policies enacted over the past few decades. "The information from this study is absolutely insane," says Hannah, a social media commentator who discusses the study in a recent video. One of the most significant shifts occurred in the 1980s under President Reagan, when the top marginal income tax rate was slashed from 70% to 28%. This dramatically reduced the tax burden on the wealthiest Americans, leading to a rapid accumulation of wealth at the top. Further tax cuts under Presidents George W. Bush and Donald Trump continued to exacerbate inequality. The 2017 Trump tax cuts alone delivered an estimated $1.1 trillion in tax breaks to the top 1%, while providing little relief for middle- and low-income workers. The decline of labor unions has also played a crucial role in suppressing wages for the majority of workers. By 2019, the share of taxable income earned by the bottom 90% had fallen to below 47 percent—a dramatic decline from 67 percent in 1975. The study underscores the need for policies that address income inequality and promote a more equitable distribution of economic growth.