Here’s another reason I think the rise of income inequality is real. If income inequality had stayed about the same over the past few decades, then you’d expect wealth inequality to stay roughly the same too. But that’s not what’s happened:
Measurement of wealth has its own problems, but it doesn’t suffer from possible tax changes that might mask its actual value. And since this is presented as a multiple of median wealth, issues of the proper inflation rate don’t come into play. Nor does non-cash income.
In just three decades, the wealth of the top 1 percent has nearly tripled compared to the median. This is consistent with a considerable increase in income compared to the median. It is not consistent with the idea that the income of the top 1 percent hasn’t changed, but only seems like it has. One way or another, all this extra wealth came from real income.