Top 1 Percent's Income Grew 275 Percent From 1979 to 2007

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"But it is one thing for successful entrepreneurs to attain great riches, another for poorly performing company bosses taking no risks with their own capital to award themselves large pay-outs," he said.

The "equalizing effect" of transfer payments and federal taxes on household income was smaller in 2007 than it had been in 1979, according to the CBO, sparking controversy in the debate over whether to increase taxes on the rich.

In 1979, households in the bottom quintile received more than 50 percent of transfer payments. In 2007, similar households received about 35 percent of transfers. Meanwhile over that period, the overall average federal tax rate fell slightly, the composition of federal revenues shifted away from progressive income taxes to less-progressive payroll taxes, and income taxes became slightly more concentrated at the higher end of the income scale.

"The effect of the first two factors outweighed the effect of the third, reducing the extent to which taxes lessened the dispersion of household income," Douglas Elmendorf, CBO director, wrote on the CBO website.

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