CT Voices for Children and CAHS today released a new report examining income inequality in Connecticut.
Over the last three decades, Connecticut has changed from being one of the most egalitarian states to being one of the most unequal. Over this period, Connecticut experienced the greatest increase in income inequality among all states between its high and low-income households.
- The greatest share of income gains have gone to the wealthiest 1 percent, who have vastly outpaced even the very well-off. The share of total state Adjusted Gross Income (AGI) going to the top 1 percent has soared over the last two decades, increasing from 17% to 28%.
- The 99th percentile of taxpayers in Connecticut earn about $766,000 in state AGI, over $500,000 more than the $225,000 earned by well-off households at the 95th percentile. The income of the near-rich is actually closer to that of the poorest fifth of households, who earn $17,000, than it is to the $766,000 earned by the wealthiest Connecticut residents.
- Connecticut’s inequality ranks second only to New York’s among U.S. states on the Gini coefficient, one of the most widely used measures of inequality.
This deep inequality threatens dire outcomes not just for those left behind, but for all of us. It it calls into doubt our idea that anyone can work hard and reach the middle class. Plenty of people are working hard and still can’t educate their children or send them to college – or provide for their families or build the American dream.
The report recommends state policies to limit the damaging impact of these trends, including:
- Raising and indexing the minimum wage to inflation,
- Shoring up the unemployment insurance compensation trust fund,
- Making the state and local tax code less regressive by reducing reliance on property and sales taxes, which hit low-income households particularly hard, compared to progressive income taxes, and
- Strengthening programs that preserve and expand opportunity, such as the state earned income tax credit and support for higher education.