http://www.tpmcafe.com/blog/coffeehouse/2007/dec/13/boy_have_we_got_an_inequality_problem just reported that the
The Congressional Budget Office (CBO) just updated their invaluable data series on income inequality.
In looking at them I came up with a couple of very interesting charts.
Standard economic theory says this large gain in profits should be reflected in higher
savings and/or higher capital spending. But we have not seen either response.
However, the much higher income inequality and large cyclical increase in profits
have generated somewhat higher tax receipts than we had at the bottom of the cycle.
So through these mechanisms we do seem to be getting something of a supply side
impact on tax receipts, but given these other developments it is amazingly small.