NEW YORK (CNN/Money) -
Americans' overall income shrank for two consecutive years after stocks plunged in 2000, the first time that has effectively happened since the current tax system was put in place during World War II, according to a published report Thursday.
The New York Times, reporting data from the Internal Revenue Service, said gross income reported to the agency fell 5.1 percent to $6.0 trillion in 2002, the most recent year for which data is available, down from $6.35 trillion in 2000. Because of population growth, average income fell even more, by 5.7 percent, and adjusted for inflation the decline was 9.2 percent.
The paper said the decline was due to a combination of the big fall in the stock market and the loss of jobs and wages in well-paying industries as the recession started in 2001.
The paper said before the recent drop the last decline posted for even one year was 1953.
The drop in income has hit government tax collections -- the paper said individual income taxes declined 18.8 percent between 2000 and 2002. Part of that was due to tax cuts passed in 2001.
The report said the sharpest drops were in both the number and the earnings of people with the highest incomes. Those with incomes of $10 million or more saw average income fall 22 percent, while the number of returns reporting incomes at that level fell 53 percent during the two year period.
Meanwhile the average income of those filing returns with incomes between $25,000 and $500,000 saw the average income little changed, somewhere between a 0.1 percent decline and a 0.2 percent gain, depending upon the income category, the Times said.