Economists Debate True Scale of Inequality Due to Data Gaps on Unreported Income and Tax Evasion

There is a debate among economists over whether income inequality has truly risen sharply since the 1960s or stayed flat. The answer hangs on technical details about unreported income and tax evasion.

The two sides make different assumptions about who evades more taxes - the rich or the middle class and poor. But the data to resolve this is quite limited.

How economists define "income" also drives the different conclusions. This includes government spending on public goods and health care, which many wouldn't consider real personal income.

Outside the debate, other data do show rising inequality, like the huge growth in billionaire wealth and diverging life expectancies between rich and poor.

In the end, economics relies on assumptions about human behavior and what constitutes income. So reasonable people can disagree given the data limitations.