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A study coauthored by a University of Tennessee, Knoxville, political science professor has found that as the Republican Party’s control of Congress increases, so does the share of the nation’s wealth held by the top 1 percent of earners.

Released this week, the study, The Rise of the Super-Rich: Power Resources, Taxes, Financial Markets and the Dynamics of the Top 1 Percent, 1949 to 2008, was coauthored by UT’s Nathan Kelly and Thomas W. Volscho of City University of New York-College of Staten Island. It was published Monday in the American Sociological Review.

The researchers looked at how much of the nation’s income flowed to the top 1 percent of earners over time and how that flow correlated with political domination in the US Congress.

“We discovered that income inequality increased during periods of Republican control of Congress and decreased when the Democratic Party was in control,” Kelly said.

The nation’s top 1 percent of earners took home approximately 10 percent of all income from the post-World War II period up to 1980, Kelly said, which also was a time of Democratic Party control of Congress.

But starting in the early 1980s, when control of Congress passed to the GOP, top earners began increasing their share of national income. By 2007, the study showed, the nation’s top earners were collecting 23.5 percent of all income in the United States.

The study showed that each one-percentage-point increase in the share of congressional seats held by Republicans resulted in a .08-percent increase in aggregate income going to the nation’s top earners.

The reasons for the increasing income inequality were attributed to policy decisions made at the congressional level, Kelly said.

“To a large extent, Congress sets the national agenda on taxes and legislation and whether those policies favor corporations or individuals,” he said, with corporate-friendly laws boosting top income share and labor-friendly laws reducing that share.

Other findings of the study:

  • Rising levels of union membership reduced income inequality, while shrinking membership in labor unions tended to boost income inequality.
  • Decreasing levels of capital gains taxes and income taxes increased the share of national income going to its top earners and boosted the disparity between those top earners and the rest of the country.
  • Increases in the Standard & Poor’s 500 composite stock index and Case-Shiller home price index led to greater income disparity among the top 1 percent of earners.

C O N T A C T :

Nathan Kelly (865-974-7186, nkelly@utk.edu)