Inequality grows in America
The difference in income between the 1% richest and the other 99% was higher than ever in 2012, researchers from the University of California, Berkeley, the Paris School of Economics and Oxford University have revealed in an updated study.
The economists gathered data from Internal Revenue Service figures dating to 1913.
Over 19% of USA’s household income in 2012 was earned by the richest 1% of Americans.
The top 10% earners represented a record 48.2% of total earnings last year. In other words, 90% of Americans captured just 51.8% of total earnings in 2012.
The gap between the rich and the rest of the country in 2012 broke the previous record set in 1927.
Inequality has been growing for nearly 3 decades
According to the report, for nearly three decades income inequality in the USA has been growing.
Overall, personal revenue before tax for the top 1% richest households rose 19.6% in 2012, compared to just 1% for the other 99% of households.
Co-author Emmanuel Saez, who works at the University of California, Berkeley, added that the rise in income among the top 1% was probably partly due to sales of stock to avoid higher capital gains taxes in January 2013.
Recent policy changes attempting to address the growing income gap in America have been tiny in comparison to those that took place coming out of the Great Depression, Saez added. “Therefore, it seems unlikely that US income concentration will fall much in the coming years.”
The economists did not count Social Security income in their analysis.
During the financial crisis period of 2007-2009, incomes fell by over 36% among America’s richest individuals, compared to 11.6% for the rest of the country.
However, during the last three years, the vast majority (95%) of all income gains have been enjoyed by the top 1%.
The top 1% of American households includes those earning at least (pre-tax) $394,000 annually, while the top 10% earn $114,000 or more.