NEW EVIDENCE ON TAXES AND INCOME

People in this country have long moved up the income ladder over time, and this income mobility continues to be true. While some people do remain in the lowest income group, they are the exception. Laffer and Moore compared the returns of tax filers in the lowest tax rate bracket (zero) in 1987 with their returns in 1996:

• Only one third of the tax filers were still in the zero tax bracket.
• But 25 percent were now in the 10 percent bracket, 32 percent had moved up to the 15 percent bracket and 9 percent were in the 25 percent, 28 percent, 33 percent or 35 percent brackets; and that was following them for a decade, not a generation.

What is also striking about the data is that the poor today are, in general, not the same people who were poor even a few years ago, say Laffer and Moore.

READ MORE