Tax Law and Business Organization Strategy

Treasury Department Releases Study on Income Mobility of Individuals

The study on income mobility of U.S. taxpayers from 1996 through 2005 revealed that "a majority of American taxpayers move from one income group to another over time." The major findings of the study included:

  • approximately half of the taxpayers who began in the bottom quintile moved up to a higher income group within 10 years
  • about 55% of taxpayers moved to a different income quintile within 10 years
  • among those with the very highest incomes in 1996, the top 1/100th of 1%, only 25% remained in the group in 2005
  • median real incomes of all taxpayers increased by 24% after adjusting for inflation
  • real incomes of two-thirds of all taxpayers increased over the 10-year period
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