Forget "makers" and "takers" -- a new Brookings Institution analysis shows that there's still plenty of inequality to go around after the federal government takes its share of your monthly paycheck.

In the video above, Brookings Senior Fellow David Wessel sums it all up, with Legos. Legos! (if you prefer boring old charts I've stuck one below).

Before taxes, the top 20 percent of wage earners make a little over $300,000 per year. That's about 21 times greater than the $14,000 average earnings in the bottom income quintile. But once taxes -- including income, payroll, excise and a share of corporate taxes -- are accounted for, the average income of top earners dips to about $229,000, while the average income of the bottom 20 percent falls only a few hundred bucks to $13,800.

That's still good for a seventeen-fold difference between the top and the bottom income quintiles -- not too shabby if you're sitting at the top. As Wessel says, "the U.S. tax system does reduce inequality, but there’s still a lot of it left after taxes."


Depending on your political leanings you probably think this is either way too much redistribution, or not nearly enough. Conservatives like to point out that the top 20 percent of wage earners pay around 84 percent of all income taxes. On the other hand, liberals will say that that's precisely how a progressive tax system like ours should work -- and that with an average after-tax income of $229,000, life isn't exactly difficult at the top.

Both sides do generally agree that the tax code is a hot mess in need of serious revision. There's plenty of garbage in the tax code, incentivizing extravagant spending on everything from gambling to yachts. But as with everything else in Washington, there's little consensus on how change things. For now we're stuck with the tax system we have -- yachts and all.