Top 1 Percent Took Record Share of 2012 US Income
The income disparity between the wealthiest 1 percent of American earners and everyone else widened to a record gap in 2012.
The Associated Press reports the top 1 percent of US earners made 19.3 percent of national household income in 2012, the largest slice of the proverbial pie since the Internal Revenue Service (IRS) began keeping records a century ago. The latest figures reflect a continuing widening of income inequality, which has been growing for three decades.
In 2012, the income of the top 1 percent of US earners rose by 19.6 percent. For the remaining 99 percent, incomes rose only 1 percent. Since the Great Recession officially ended in 2009, 95 percent of all income gains went to the top 1 percent of earners.
Emmanuel Saenz, a University of California, Berkeley researcher who studies inequality, attributed at least part of the 1 percent’s recent record gains to wealthy individuals cashing in stocks and other securities in order to avoid higher capital gains tax rates which took effect in January.
In March, Saenz and fellow economist Thomas Piketty analyzed IRS data and found that between 1966 and 2011, the average inflation-adjusted income of the bottom 90 percent of US workers grew by a negligible $59, while the income of the top 10 percent soared by $116,071. Depicted on a chart with $59 represented as one inch, it would take a sheet of paper nearly 163 feet long to show $116,071.
The figures are even more staggering when comparing the bottom 90 percent to the top 1 percent and top .01 percent. If $59 equals one inch on our chart, the top 1 percent’s line would extend 884 feet. The top .01 percent, whose average 2011 income of $23.7 million was $18.4 million more than it was in 1966, would require a sheet of paper nearly five miles wide.
The ever-growing disparity in income growth rates is largely attributable to the reduction of federal tax burdens for the wealthiest Americans, Saenz and Piketty claim. Pulitzer Prize-winning tax policy journalist David Cay Johnston recently wrote about a “major re-slicing of the national income pie” resulting from “tax, employment and other rule changes that began with President [Ronald] Reagan and intensified under President George W. Bush.”
According to the US Census Bureau, 1 out of every 6 Americans is living in poverty, with poverty rates soaring to 27.6 percent for blacks and 31.2 percent among families with a female head of household.
The United Nations, which tracks global income equality using a measure of statistical dispersion known as the Gini coefficient, ranks the United States 52nd in worldwide income equality, between Senegal and Cambodia.