How evenly is income shared in America — and should taxes and benefits do more, or less, to change it?
Quick estimate
Quick opinion
The situation
There are many ways to measure inequality. On Rebalance we use one main indicator, the Income gapThe Income gap is the ratio of the average income per adult of the richest 10% of Americans to the average income per adult of the bottom half (bottom 50%). It counts income after all taxes and government benefits — including cash benefits, tax credits, and health coverage such as Medicare and Medicaid. A value of 9× means the top 10% get nine times as much income per person as the bottom half. A smaller number means less inequality. (Measured per adult; source: World Inequality Database.): the average income per adult of the richest 10% of Americans divided by that of the bottom half. A lower number means a more equal distribution. It can be measured before or after taxes and government benefits.
Before taxes and benefits — mainly what people earn from work and from what they own, plus Social Security pensions and unemployment insurance — the top 10% received 47% of all income in 2023, and the bottom 50% just 13%. That means the top 10% had about 17 times as much income per adult as the bottom half.
After taxes and benefits, the top 10% received 37% and the bottom 50% received 21%, so the gap falls to about 9 times. Here, benefits include tax credits such as the Earned Income Tax Credit and the Child Tax Credit; food aid through SNAP; and health coverage such as Medicare and Medicaid.
In other words, today's taxes and benefits already do some redistribution: they go part of the way toward reducing inequality. Progressive income taxes take a larger share of income from people with high incomes, while benefits add the most, relative to income, at the bottom. Together they cut the Income gapThe Income gap is the ratio of the average income per adult of the richest 10% of Americans to the average income per adult of the bottom half (bottom 50%). It counts income after all taxes and government benefits — including cash benefits, tax credits, and health coverage such as Medicare and Medicaid. A value of 9× means the top 10% get nine times as much income per person as the bottom half. A smaller number means less inequality. (Measured per adult; source: World Inequality Database.) from about 17× to 9×.
Income is not the same as wealth. Income is what people earn or receive each year; wealth is what they own — homes, savings, stocks and businesses, minus debts. Wealth is far more unequal. The top 10% of households own 69% of all net worth, and the bottom half own just 2.3%, so the top 10% hold about 150 times as much wealth per household as the bottom half (up from about 87 times in 1989). Taxes and benefits mostly change income from year to year, so Rebalance uses the income measure as its main indicator; wealth changes more slowly, through things like the estate tax and capital gains tax.
Income
Top 10% ÷ bottom 50%, average income per adult
Wealth
Top 10% ÷ bottom 50%, average net worth per household (note the much larger scale)
Income: per adult, World Inequality Database (2023 is the latest year with full data). Wealth: per household, Federal Reserve Distributional Financial Accounts (1989 is the first year available; 2026 is the latest quarter).
A few other numbers: the median person with an income had $46,960 in 2025, and the median household $87,460 (both before taxes). The top 1% of adults receive about 21% of all income before taxes — more than the entire bottom half (13%). On the widely used Gini index, US income inequality is about 0.47 after taxes and benefits and 0.59 before (0 means perfect equality, 1 means one person has everything).
Income inequality has risen since about 1980. Before taxes and benefits, the gap between the top 10% and the bottom half has roughly doubled, from 8.4× to 17.4×. After taxes and benefits it rose much less, from 5.7× to 9.1×. That is because the government now does more to narrow the gap: progressive income taxes take a larger share from people with high incomes, while benefits — Social Security, Medicare and Medicaid, the Earned Income Tax Credit, SNAP and others — add the most, relative to income, at the bottom. Today taxes and benefits cut the gap roughly in half; in 1980 they cut it by about a third.
Why has inequality risen? Economists point to several causes, and argue about their relative weight. Technology has raised the pay of highly skilled and educated workers while automating many routine middle-wage jobs. Globalization moved much manufacturing to lower-wage countries. Weaker worker bargaining power — the decline of unions and a federal minimum wage that has lost value to inflation — held down pay at the bottom. “Winner-take-all” markets let top firms, executives and stars capture far larger rewards. A rising share of income has gone to owners of capital — stocks, real estate and businesses — which is concentrated at the top. And tax policy changed: top income tax rates fell sharply after 1980. Looking ahead, many economists expect artificial intelligence and automation to accelerate the rise in inequality, as AI substitutes for a wider range of work and its gains flow mostly to the companies, investors and highly skilled workers who own and use it — unless policy responds.
So the question is: should we change taxes and benefits to reduce the Income gapThe Income gap is the ratio of the average income per adult of the richest 10% of Americans to the average income per adult of the bottom half (bottom 50%). It counts income after all taxes and government benefits — including cash benefits, tax credits, and health coverage such as Medicare and Medicaid. A value of 9× means the top 10% get nine times as much income per person as the bottom half. A smaller number means less inequality. (Measured per adult; source: World Inequality Database.) — or should we let it rise, with less redistribution? Changes that would make a noticeable difference include:
- Top income tax rates: raise them (or add a surtax on very high incomes) to narrow the gap, or cut them to widen it.
- Capital gains and estate taxes: taxing capital gains like wages and ending the step-up in basis would narrow the gap; cutting these taxes would widen it.
- Tax credits for working families: expanding the Earned Income Tax Credit and the Child Tax Credit (as in 2021) narrows the gap; letting them shrink widens it.
- Health and food benefits: Medicaid and SNAP are among the largest supports for the bottom half; expanding them narrows the gap, while cuts (such as those in the 2025 tax law) widen it.
- Bigger ideas: a universal basic income would narrow the gap sharply; a flat income tax would likely widen it.
You'll be able to explore the effects of these changes on other pages. But first, we encourage you to go through the rest of this page and give your Considered Opinion as your target for the Income gapThe Income gap is the ratio of the average income per adult of the richest 10% of Americans to the average income per adult of the bottom half (bottom 50%). It counts income after all taxes and government benefits — including cash benefits, tax credits, and health coverage such as Medicare and Medicaid. A value of 9× means the top 10% get nine times as much income per person as the bottom half. A smaller number means less inequality. (Measured per adult; source: World Inequality Database.).
Historical context
The Income gapThe Income gap is the ratio of the average income per adult of the richest 10% of Americans to the average income per adult of the bottom half (bottom 50%). It counts income after all taxes and government benefits — including cash benefits, tax credits, and health coverage such as Medicare and Medicaid. A value of 9× means the top 10% get nine times as much income per person as the bottom half. A smaller number means less inequality. (Measured per adult; source: World Inequality Database.) before and after taxes and benefits, from 1913 to 2023. The shaded band between the lines is how much taxes and benefits narrow the gap. Hover over a line for the value in a given year.
The Gilded Age to the Great Compression. In the 1910s and 1920s income was highly concentrated: before taxes the top 10% received about 14–17 times as much per person as the bottom half, peaking just before the 1929 crash. The government was small, so taxes and benefits narrowed the gap only modestly. The Great Depression and World War II changed that. Top income tax rates rose as high as 94%, wartime wage controls and strong unions lifted pay at the bottom, and by 1944 the gap had roughly halved. Economists call this the “Great Compression.”
Three decades of stability. From the late 1940s to the late 1970s the gap stayed low: about 8–10 times before taxes and 6–7 after. New programs — Medicare, Medicaid and food stamps in the 1960s, and the Earned Income Tax Credit in 1975 — added to incomes at the bottom.
Rising inequality since 1980. Before taxes, the gap roughly doubled, from 8.4× in 1980 to 17.4× in 2023. Explanations include technology and globalization that rewarded highly skilled workers, the decline of unions and of the real minimum wage, soaring executive pay, and a growing share of income going to owners of capital. Top tax rates also fell — the top income tax rate went from 70% to 28% in the 1980s — which some economists find encouraged higher pre-tax pay, and more income reported, at the top.
Why the after-tax line rose less. After taxes and benefits, the gap rose from 5.7× to a peak of about 10× in 2019. It rose less because benefits grew: health programs (Medicare, Medicaid, and the Affordable Care Act's Medicaid expansion in 2014) grew much faster than wages and count as income to the people they cover, and the Earned Income Tax Credit and Child Tax Credit were expanded. As a result, taxes and benefits now narrow the gap by about half, compared with about a quarter in 1913 and 1960.
The pandemic and after. In 2020–21, stimulus checks, much larger unemployment benefits and the expanded Child Tax Credit temporarily raised incomes at the bottom, and the after-tax gap fell to about 8.4×. When that aid ended, the gap rose again, to 9.1× in 2023, while booming stock prices and profits pushed the before-tax gap to new highs.
International context
Among wealthy democracies, the US has one of the largest income gaps. After taxes and benefits, the top 10% of Americans get about 9 times as much per person as the bottom half, compared with about 6 times in Germany, Canada and Europe as a whole, under 4 times in France, and about 3 times in Denmark and Sweden. Most of the difference starts before government steps in: before taxes and benefits the US gap (17×) is close to double Europe's (about 10×). US taxes and benefits narrow the gap by about half — a similar proportion to many European countries — but because they start from a wider gap, the result is still much more unequal.
Poorer and middle-income countries tend to be more unequal still: Mexico, Brazil and South Africa have gaps of 24 to 29 times, and India about 20. Their tax and benefit systems are smaller (so they narrow the gap less), many workers are in informal jobs outside the tax system, and land and capital are often highly concentrated — in some cases a legacy of colonial rule or apartheid. The world as a whole (26×) is more unequal than almost any single country, because it adds the enormous gap between average incomes in rich and poor countries to the gaps within each one.
The chart below shows each country's gap before and after taxes and benefits, so you can see how much each one's system narrows it.
Latest available year for each (shown under each name). Some countries' latest full data are older (Japan 2013, China and Italy 2015, Russia 2017). Per adult; World Inequality Database.
Pros and cons
The main arguments for and against using taxes and benefits to narrow the Income gapThe Income gap is the ratio of the average income per adult of the richest 10% of Americans to the average income per adult of the bottom half (bottom 50%). It counts income after all taxes and government benefits — including cash benefits, tax credits, and health coverage such as Medicare and Medicaid. A value of 9× means the top 10% get nine times as much income per person as the bottom half. A smaller number means less inequality. (Measured per adult; source: World Inequality Database.). Rate how much you agree with each.
Large income gaps make it harder for children from poorer families to get ahead. Countries and places with more inequality tend to have less economic mobility.
When income is highly concentrated, so is political influence. Wide gaps can erode trust and a sense of shared fate, and fuel polarization.
An extra dollar matters far more to a struggling family than to a wealthy one. Benefits and tax credits measurably reduce poverty and improve children's health and schooling.
Higher taxes on earnings, investment and business can discourage work, saving and risk-taking, slowing the economic growth that raises incomes for everyone.
High incomes often reflect skill, effort, risk and value created for others. Taking more from those who earned it is itself unfair, and what matters most is whether the poor are better off, not the size of the gap.
Benefits that phase out as income rises can discourage work, and government programs can be costly and inefficient. Private charity, education and growth may do more to help.
Considered opinion
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Wonkery
The Income gapThe Income gap is the ratio of the average income per adult of the richest 10% of Americans to the average income per adult of the bottom half (bottom 50%). It counts income after all taxes and government benefits — including cash benefits, tax credits, and health coverage such as Medicare and Medicaid. A value of 9× means the top 10% get nine times as much income per person as the bottom half. A smaller number means less inequality. (Measured per adult; source: World Inequality Database.) and its history come from the World Inequality Database (post-tax and pretax national income, per adult); wealth figures from the Federal Reserve's Distributional Financial Accounts; and median incomes from the Census Bureau.
How sure are these numbers? Measuring inequality takes assumptions — for example, how much income goes unreported, and how to divide the value of government services and health benefits among people. Our main source, the World Inequality Database (built by economists at the Paris School of Economics and UC Berkeley), finds a large rise in US inequality since 1980, even after taxes and benefits. Other researchers, notably Gerald Auten and David Splinter, economists at the Treasury and Congress's Joint Committee on Taxation, find a much smaller rise after taxes and benefits. The Congressional Budget Office's estimates fall in between, closer to the World Inequality Database. Most economists accept that inequality rose; the dispute is over how much.