Chapter 2, Problem 10RE

Income Distribution The following data represent the percentage of total adjusted gross income (AGI) earned and percentage of tax paid by various income classes. The top 1% represents the percentage of total AGI earned and tax paid by those whose income is higher than 99% of all earners. The bottom 50% represents the percentage of total AGI earned and tax paid by those whose income is in the bottom 50% of all income earners. For example, in 2001, 17.53% of all income earned in the United States was earned by those in the top 1% of all income earners, while 13.81% of all income earned in the United States was earned by those in the bottom 50% of income earners.

1. a. Use the data to make a strong argument that adjusted gross incomes are diverging among Americans.
2. b. Use the data to make an argument that, while incomes are diverging between the top 1% and bottom 50%, the total taxes paid as a share of income are also diverging.