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Income inequality has been growing for three decades, but the gap between America’s richest and the rest of us is now wider than it’s been since before the Great Depression.
That’s the conclusion of economists at the University of California, Berkeley, the Paris School of Economics and Oxford University, who analyzed IRS data dating back to 1913, The Associated Press says. Income inequality was at its lowest in 1973, when the wealthiest 1 percent took home 7.7 percent of earnings.
Last year, the top 1 percent of Americans by wealth took home more than 19 percent of total household income, economists found. That’s the largest share since 1928, the year before the stock market crashed. If you look at the top 10 percent, the amount is mind-boggling: They got a record 48.2 percent of American income last year. The economists defined income as including wages, pension payments, dividends and capital gains.
One reason for the sudden surge was a capital gains tax hike that took effect this year, economist Emmanuel Saez told the AP. Many wealthy investors cashed in stock to avoid the extra taxes. While the richest were hit hardest by the recent financial crisis, they’ve also enjoyed huge gains since — “95 percent of the income gains reported since 2009 have gone to the top 1 percent,” the AP says. It’s mainly from soaring corporate profits and stock prices.
What’s it take to make the top 1 percent? Pretax income of $394,000. The top 10 percent earned more than $114,000.