Tags: wealth | inequality | income

Study: Richest 1 Percent Earn Record Share of US Income

By Lisa Barron   |   Wednesday, 11 Sep 2013 09:48 AM

The income gap between the richest 1 percent of Americans and the rest of the country widened to a record last year, according to an analysis of Internal Revenue Service figures dating back 100 years.

The analysis of IRS records back to 1913 found that the nation's very wealthiest — those making more than $394,000 — earned 19.3 percent of all household income in 2012, while the top 10 percent took home a record 48.2 percent of total earnings, The Associated Press reported.

The analysis by economists at the University of California, the Paris School of Economics, and Oxford University also showed that while income inequality has been growing for almost three decades, the top 1 percent's share of pre-tax income had not yet surpassed the 18.7 percent level it reached in 1927, before the stock market crashed, until last year.

Berkeley's Emmanuel Saez wrote in a report accompanying the analysis that the incomes of the richest Americans may have jumped last year partly because they cashed in stock holdings to avoid higher capital-gains taxes that took effect in January, The AP reported.

In 2012, incomes of the top 1 percent rose nearly 20 percent compared to a 1 percent increase for the remaining 99 percent, or everyone else.

The income figures include wages, pension payments, dividends, and capital gains from the sale of stocks and other assets. They do not include benefits from government programs such as unemployment and Social Security.

The richest Americans were hit hard by the Great Recession of 2007-2009, with their incomes falling more than 36 percent, but the top 1 percent have since benefitted from rising corporate profits and stock prices. In fact, 95 percent of the income gains reported since 2009 have gone to the top 1 percent, The AP reported, citing the analysis.

By comparison, in the 1990s the top 1 percent drew 45 percent of the income gains and 65 percent following the economic expansion after the 2001 recession.

The top 10 percent — with earnings exceeding $114,000 a year — also have fared well, gaining more than 48 percent of household income, another record. The next biggest take in household income for this group was 46.3 percent in 1932.

Saez wrote that America's top earners tend to be highly paid executives or entrepreneurs rather than those who live on inherited wealth.

Saez also was one of the authors of a separate study that found the U.S. has the worst income inequality of all developed nations.

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