Nobody's offered a new definition here so the words "income inequality" have to mean what they mean. We want it and we don't want income equality.
The study of fixed exclusive income strata however raises other issues. You raised the question of whether America's worse off if average incomes increase while "the largest portion are seeing incomes decline". We do not know if this is the case --what we know is that the Census Br says real median incomes are less than they were 8 years ago. Even if they're correct it may not be the result of declining incomes for most people but rather the result of new entrants to the labor force from say, demographics or immigration. We don't know, and we can't say something we don't know is bad enough to require raising taxes.
Income castes are bad where lower castes are not allowed upward mobility. That's not the case in the US as most Americans are able to rise up through quintiles and one out of eight Americans are eventually able to make it to the infamous "one percent" that the occupy folks want to murder. What we do want is (like you sad) is economic growth --an expanding economy and rising productivity-- and we're together on the idea that "growth is decidedly insufficient due to the regulatory and fiscal environment". mho is that at its core the main obstacle we face is a class warfare borne of envy.
Americans are allowed to fall out of the upper income brackets as well. That’s critical, too. The other part of this is single entry accounting. Incomes can fall in an increasing productivity economy and the cost of goods also makes a lower income not lose any purchasing power. It can actually gain purchasing power in that case.
