[i]Had they picked a higher income level (say $1M/year or higher), you can be guaranteed that the results would have said something very different, namely that the Bush tax cuts have generated a huge windfall for the people in category 1.[/i]
The other point that is ignored is the fraction of national income going to the top few percent of percent.
Rich are paying much of the income tax because they are making far more of the income. No other tax is progressive — state income taxes are usually close to flat at that level, and consumption taxes are naturally regressive, likewise SS and FICA.
They are capturing all of the productivity gains and GDP increase. Real median income per person has been flat in the Bush “expansion”, and has hardly moved since 1980.
Suppose the DJIA were at the same inflation adjusted (and dividend adjusted) place since 1980. Don’t you think the Bush classes would be screaming?
It used to be that both the owners and workers benefitted alike from the increase in productivity from capital investment and technological progress. Now? Only in China.
When did this horrible phrase “wage inflation” pop up in normal discourse? Why not “salary increases”?
There is propagandistic wallpapering that goes like “oh normal workers have stocks in their pension and 401k”. Sure, how much? How much of their total lifetime income comes from *returns* on stocks (not capital invested) versus working for a living? It’s quite small. They’d benefit far more by making more money.