Tax Receipts Are Up, Which Means Inequality Is Too

It’s a bad news, good news scenario for the US economy and budget outlook. Income inequality is rising again after subsiding somewhat after the Covid-19 pandemic. But as a result, income tax receipts are booming — in fact, that’s one of the easiest ways to tell that inequality is rising.

This is a long-running trade-off for the US, which last balanced its federal government budget in the early 2000s on the heels of a big increase in income inequality. With every week bringing another viral essay about how artificial intelligence is going to take all the jobs and another market panic about which industries or individual companies will be devastated, it’s also a bit unsettling. Are we beginning to see the winners and losers of the AI revolution in the tax data?