Sept. 30, 2014 by Darius
Yesterday’s New York Times featured an op-ed by Princeton University economist Paul Krugman entitled “Our Invisible Rich.” It makes the argument that most Americans have no idea how rich the rich have really become in the United States. Moreover, Krugman argues that the rich benefit from their invisibility in policy discussions. In the interest of making this issue less invisible, I will share some of the statistics from Krugman’s piece and from a couple of other recent articles.
- The top 1% of Americans now hold 40% of the nation’s wealth — up from 25% in 1973.[from “Our Invisible Rich,” The New York Times, September 29, 2014, p.A23]
- Celebrities may be highly visible, but they make up only a tiny fraction of the rich. According to Forbes magazine, Robert Downey, Jr. was the highest-paid actor in 2013, making $75 million. Forbes also reported that the top 25 hedge fund managers in the US received, on average, nearly $1 billion each in 2013. [from “Our Invisible Rich,” The New York Times, September 29, 2014, p.A23]
- According to the conservative Heritage Foundation, the top 10% of income tax filers pay 68% of the nation’s income tax. What is less widely reported is that the top 10% of income tax filers account for almost half of all income earned and 75% of the nation’s wealth. [from “Our Invisible Rich,” The New York Times, September 29, 2014, p.A23]
- In 1979, the top 1% were taxed at such a rate that, post-tax, they accounted for about 10% of the nation’s income (not to be confused with wealth). If the top 1% were taxed at the same rate in 2012, the additional money would have been equivalent to every family in the other 99% getting a check for $7,105. [from “Equation Is Simple: Education=Income,” The New York Times, September 11, 2014, p.B1]
- The most recent economic expansion, following the 2008 financial meltdown, has resulted in continued losses for the bottom 90% of earners: between 2009 and 2012, the bottom 90% actually saw their income shrink. The top 10% not only captured all of the income growth during the expansion, they also captured some of the bottom 90%’s previous income. By narrowing the scope of analysis further, the top 1% by itself captured 95% of all income growth between 2009 and 2012. [from “Economic Expansion for Everyone? Not Anymore,” The New York Times, September 27, 2014, p.B1]
It is clear that when policymakers bicker over income tax rates for the top 1% or the top 10%, the number of people affected might sound small and the difference inconsequential, but the revenue implications and social consequences are huge.
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