Facts on the Concentration of Wealth

compiled by George Draffan
Endgame

"We've learned that piling up material goods cannot fill the emptiness of lives which have no confidence or purpose."
-- Jimmy Carter's "Malaise" Speech, 1979

"Owning something is freedom, as far as I'm concerned."
-- George W. Bush, Washington, D.C., October 15, 2002

"It is only the poor who are forbidden to beg."
-- Anatole France

US CENSUS BUREAU STATISTICS
Wealth & assets
Income 1999
By quintiles
Historical
Income statistics

MORE STATISTICS
Federal Reserve Bank Survey of Consumer Finances
The Review of Income and Wealth 1966-2000
Edward N. Wolff, Dept of Economics, New York University

 

MORE RESOURCES
Wealth, Income, and Power by G. William Domhoff
Executive Excess
Executive Paywatch (AFL-CIO)
Public Education Network
Shared Capitalism Institute
United for a Fair Economy
Working Group on Extreme Inequality
Too Much
The Corporate Consensus

Median net worth of US households in 1995:
poorest fifth of the households: $5,000
second poorest fifth $21,966
middle fifth $35,949
second richest fifth $52,860
richest fifth $116,232

Source: US Census Bureau, Household Networth & Asset Ownership 1995, Publication P70-71, issued Feb 2001.

Racial inequality: In 1995, the household median net worth was $49,030 for households with a White householder, $7,073 for households with a Black householder, and $7,255 for households with a Hispanic householder. (Source: US Census Bureau, 1995 highlights).

US Census Bureau 2001 factsheet on wealth

Income inequality: In 1999, the poorest fifth of the US population received less than 4% of the total income. The second poorest fifth received 9%. The middle fifth received 15%. The second richest fifth received 23%. The richest fifth received 49%.
(Source:
US Census Bureau, 1999 Income Table F ).

Historical tables on income inequality

Since 1973 the average income of the top 1% of Americans (income at least $90,000) has doubled, and the income of the top 0.1% (145,000 taxpayers with income at least $1.6 million) has tripled. (from Class in America series in the New York Times, May 2005).

Richest Are Leaving Even the Rich Far Behind. By David Cay Johnston, New York Times, June 5, 2005:

When F. Scott Fitzgerald pronounced that the very rich "are different from you and me," Ernest Hemingway's famously dismissive response was: "Yes, they have more money." Today he might well add: much, much, much more money.

The people at the top of America's money pyramid have so prospered in recent years that they have pulled far ahead of the rest of the population, an analysis of tax records and other government data by The New York Times shows. They have even left behind people making hundreds of thousands of dollars a year.

Call them the hyper-rich.

They are not just a few Croesus-like rarities. Draw a line under the top 0.1 percent of income earners - the top one-thousandth. Above that line are about 145,000 taxpayers, each with at least $1.6 million in income and often much more.

The average income for the top 0.1 percent was $3 million in 2002, the latest year for which averages are available. That number is two and a half times the $1.2 million, adjusted for inflation, that group reported in 1980. No other income group rose nearly as fast.

The share of the nation's income earned by those in this uppermost category has more than doubled since 1980, to 7.4 percent in 2002. The share of income earned by the rest of the top 10 percent rose far less, and the share earned by the bottom 90 percent fell.

Next, examine the net worth of American households. The group with homes, investments and other assets worth more than $10 million comprised 338,400 households in 2001, the last year for which data are available. The number has grown more than 400 percent since 1980, after adjusting for inflation, while the total number of households has grown only 27 percent.

The Bush administration tax cuts stand to widen the gap between the hyper-rich and the rest of America. The merely rich, making hundreds of thousands of dollars a year, will shoulder a disproportionate share of the tax burden.

President Bush said during the third election debate last October that most of the tax cuts went to low- and middle-income Americans. In fact, most - 53 percent - will go to people with incomes in the top 10 percent over the first 15 years of the cuts, which began in 2001 and would have to be reauthorized in 2010. And more than 15 percent will go just to the top 0.1 percent, those 145,000 taxpayers.

The Times set out to create a financial portrait of the very richest Americans, how their incomes have changed over the decades and how the tax cuts will affect them. It is no secret that the gap between the rich and the poor has grown, but the extent to which the richest are leaving everyone else behind is not widely known.

The Treasury Department uses a computer model to examine the effects of tax cuts on various income groups but does not look in detail fine enough to differentiate among those within the top 1 percent. To determine those differences, The Times relied on a computer model based on the Treasury's. Experts at organizations representing a range of views, including the Heritage Foundation, the Cato Institute and Citizens for Tax Justice, reviewed the projections and said they were reasonable, and the Treasury Department said through a spokesman that the model was reliable.

The analysis also found the following:

Under the Bush tax cuts, the 400 taxpayers with the highest incomes - a minimum of $87 million in 2000, the last year for which the government will release such data - now pay income, Medicare and Social Security taxes amounting to virtually the same percentage of their incomes as people making $50,000 to $75,000.

Those earning more than $10 million a year now pay a lesser share of their income in these taxes than those making $100,000 to $200,000.

The alternative minimum tax, created 36 years ago to make sure the very richest paid taxes, takes back a growing share of the tax cuts over time from the majority of families earning $75,000 to $1 million - thousands and even tens of thousands of dollars annually. Far fewer of the very wealthiest will be affected by this tax.

The analysis examined only income reported on tax returns. The Treasury Department says that the very wealthiest find ways, legal and illegal, to shelter a lot of income from taxes. So the gap between the very richest and everyone else is almost certainly much larger.

The hyper-rich have emerged in the last three decades as the biggest winners in a remarkable transformation of the American economy characterized by, among other things, the creation of a more global marketplace, new technology and investment spurred partly by tax cuts. The stock market soared; so did pay in the highest ranks of business.

One way to understand the growing gap is to compare earnings increases over time by the vast majority of taxpayers - say, everyone in the lower 90 percent - with those at the top, say, in the uppermost 0.01 percent (now about 14,000 households, each with $5.5 million or more in income last year).

From 1950 to 1970, for example, for every additional dollar earned by the bottom 90 percent, those in the top 0.01 percent earned an additional $162, according to the Times analysis. From 1990 to 2002, for every extra dollar earned by those in the bottom 90 percent, each taxpayer at the top brought in an extra $18,000.

President Ronald Reagan signed tax bills that benefited the wealthiest Americans and also gave tax breaks to the working poor. President Bill Clinton raised income taxes for the wealthiest, cut taxes on investment gains, and expanded breaks for the working poor. Mr. Bush eliminated income taxes for families making under $40,000, but his tax cuts have also benefited the wealthiest Americans far more than his predecessors' did.

The Bush administration says that the tax cuts have actually made the income tax system more progressive, shifting the burden slightly more to those with higher incomes. Still, an Internal Revenue Service study found that the only taxpayers whose share of taxes declined in 2001 and 2002 were those in the top 0.1 percent.

But a Treasury spokesman, Taylor Griffin, said the income tax system is more progressive if the measurement is the share borne by the top 40 percent of Americans rather than the top 0.1 percent.

The Times analysis also shows that over the next decade, the tax cuts Mr. Bush wants to extend indefinitely would shift the burden further from the richest Americans. With incomes of more than $1 million or so, they would get the biggest share of the breaks, in total amounts and in the drop in their share of federal taxes paid.

One reason the merely rich will fare much less well than the very richest is the alternative minimum tax. This tax, the successor to one enacted in 1969 to make sure the wealthiest Americans could not use legal loopholes to live tax-free, has never been adjusted for inflation. As a result, it stings Americans whose incomes have crept above $75,000.

The Times analysis shows that by 2010 the tax will affect more than four-fifths of the people making $100,000 to $500,000 and will take away from them nearly one-half to more than two-thirds of the recent tax cuts. For example, the group making $200,000 to $500,000 a year will lose 70 percent of their tax cut to the alternative minimum tax in 2010, an average of $9,177 for those affected.

But because of the way it is devised, the tax affects far fewer of the very richest: about a third of the taxpayers reporting more than $1 million in income. One big reason is that dividends and investment gains, which go mostly to the richest, are not subject to the tax.

Another reason that the wealthiest will fare much better is that the tax cuts over the past decade have sharply lowered rates on income from investments.

While most economists recognize that the richest are pulling away, they disagree on what this means. Those who contend that the extraordinary accumulation of wealth is a good thing say that while the rich are indeed getting richer, so are most people who work hard and save. They say that the tax cuts encourage the investment and the innovation that will make everyone better off.

"In this income data I see a snapshot of a very innovative society," said Tim Kane, an economist at the Heritage Foundation. "Lower taxes and lower marginal tax rates are leading to more growth. There's an explosion of wealth. We are so wealthy in a world that is profoundly poor."

But some of the wealthiest Americans, including Warren E. Buffett, George Soros and Ted Turner, have warned that such a concentration of wealth can turn a meritocracy into an aristocracy and ultimately stifle economic growth by putting too much of the nation's capital in the hands of inheritors rather than strivers and innovators. Speaking of the increasing concentration of incomes, Alan Greenspan, the Federal Reserve chairman, warned in Congressional testimony a year ago: "For the democratic society, that is not a very desirable thing to allow it to happen."

Others say most Americans have no problem with this trend. The central question is mobility, said Bruce R. Bartlett, an advocate of lower taxes who served in the Reagan and George H. W. Bush administrations. "As long as people think they have a chance of getting to the top, they just don't care how rich the rich are."

But in fact, economic mobility - moving from one income group to another over a lifetime - has actually stopped rising in the United States, researchers say. Some recent studies suggest it has even declined over the last generation.

(Source: Richest Are Leaving Even the Rich Far Behind. By David Cay Johnston, New York Times, June 5, 2005).

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4.5 billion people
live on less than $1,500 per year

The richest 1% of adults owned 40% of the world’s total assets in the year 2000. The richest 10% of adults accounted for 85% of total assets. The bottom half of the world adult population owned 1% of global wealth. (Source: World Institute for Development Economics Research, The World Distribution of Household Wealth, 2006).

"There were an estimated 7.7 million millionaires in the world at the end of 2003, half a million more than at the end of 2002, as stock markets and economic growth picked up and the rich took more risks with their cash.These wealthy individuals saw their riches increase by 7.7 percent to $28.8 trillion in 2003, recovering to levels seen before the global recession took hold in 2001, according to a survey on Tuesday from U.S. investment bank Merrill Lynch and technology consultancy Capgemini. And the rich are set to get richer, with their wealth forecast to grow by seven percent a year and to exceed $40.7 trillion by 2008, the survey predicted... The survey also highlighted a small, but fast-growing global group of 70,000 super rich individuals with more than $30 million in financial assets. It found that this group was growing at a faster pace than those in the $1 million-plus bracket." (World's richest worth $29 trillion in 2003; Survey: Wealthy now back at level before dot-com bust. MSNBC.com, June 15, 2004,)

Very Richest's Share of Income Grew Even Bigger, New York Times, June 26, 2003

In the late 1970s, the top one percent of the US population held 13 percent of the wealth; in 1995 it held 38 percent. (Levy, Frank. The New Dollars and Dreams ).

In 1998 the top 1 percent of the population owned 38 percent of the wealth, the top 5 percent owned over 60 percent (source: www.inequality.org/fatcsfr.html).

The top ten percent of the U.S. population owns 81.8 percent of the real estate, 81.2 percent of the stock, and 88 percent of the bonds. (Federal Reserve Bank data in Left Business Observer, No. 72, Apr. 3, 1996, p. 5).

One percent of the U.S. population owns sixty percent of the stock and forty percent of the total wealth. (Hawken, Paul, The Ecology of Commerce: A Declaration of Sustainability. New York: HarperBusiness, 1993).

The top one percent of U.S. households owned 42 percent of all stock in 1997...
The top ten percent of households owned 82 percent of all stock-market wealth...
Only 27 percent of households held more than $10,000 in stock in 1997...
57 percent of Americans didn't own any stock at all...
The top fifth of households saw their income rise 43 percent between 1977 and 1999, while the bottom fifth saw their income fall 9 percent....
Since 1973, every group in society except the top 20 percent has seen its share of the national income decline, with the bottom 20 percent losing the most. They have just 3.6 percent of national income, down from 4.4 percent a quarter century ago.
Indeed, the top fifth now makes more than the rest of the nation combined...
Rebecca Blank, who recently left the President's Council of Economic Advisors, pointed out, ‘We've gone back to levels of income and wealth inequality that this country hasn't seen since the teens and 1920s.’" (Source: Merrill Goozner, Crash of '99?, Salon.com, Oct. 1, 1999).

The top one percent of Americans receive more income than the bottom 40 percent. (Korten, David. When Corporations Rule the World, p. 108).

When he was worth $40 billion, Microsoft chairman Bill Gates was worth more than the bottom 110 million Americans (the bottom 40 percent of the population). By 1998, Gates was worth $59 billion; a year later, he was worth $85 billion. Gates is twice as wealthy as the second richest American, Microsoft co-founder Paul Allen (worth $40 billion). (Source: open letter from Ralph Nader (December 1998), citing Edward Wolff of New York University, whose calculations included home equity, pensions and mutual funds, but excluded personal cars, based on Gates' then-current net worth of $40 billion).

In 1995, 358 billionaires were worth $760 billion, the same as the poorest 20 percent of the world’s people. (Korten, David. When Corporations Rule the World, p. 83).

 

 

Wealth in the U.S.: Individuals and Families

Median U.S. family income grew by 37 percent from 1949 to 1959, by 41 percent in the 1960s, but only by 6.8 percent in the 1970s and 1980s, with 97 percetn going to the top 20 percent of the families. in the late 1970s, the top one percent held 13 percent of the wealth; in 1995 it held 38 percent.

Ten percent of the U.S. population owns 81.8 percent of the real estate, 81.2 percent of the stock, and 88 percent of the bonds.

One percent of the U.S. population owns sixty percent of the stock and forty percent of the total wealth.

Two percent of U.S. income recipients owned 50 percent of all stocks and 39 percent of all bonds.

Two percent of U.S. wealth holders own 54 percent of all net financial assets; more than half of families had no financial assets, or owe more than they own.

Ten percent of American households own 72 percent of the total wealth.

19 percent of all U.S. families own stock; 3 percent of all families own bonds.

Pension funds own almost a third of the total stock.

Distribution of U.S. wealth by percentages of the population:
top 5 percent holds 20 percent of the wealth
top 20 percent holds 45 percent
4th 20 percent holds 22 percent
3rd 20 percent holds 16 percent
2nd 20 percent holds 11 percent
bottom 20 percent holds 5 percent

Ten percent of the U.S. population owns 83 percent of all stock.

One half of one percent of the U.S. population owns 37 percent of all stock.

In 1992 the average salary of the CEOs of the largest 1,000 corporations was $3.8 million.

In 1960 CEOs received 40 times the average worker's salary. In 1992 they received 157 times.

The top one percent of Americans receive more income than the bottom 40 percent.

Between the late 1970s and the mid-1990s, the average income of lowest-income families with children fell by more than 20 percent. The avergae income of high-income families rose by nearly 30 percent; the incomes of the middle-fifth families fell by more than 2 percent.

 

Wealth in the World

The richest 1% of adults owned 40% of the world’s total assets in the year 2000. The richest 10% of adults accounted for 85% of total assets. The bottom half of the world adult population owned 1% of global wealth. (Source: World Institute for Development Economics Research, The World Distribution of Household Wealth, 2006).

In 1988, per capita GNP in the 20 richest industrial countries was $12,960; in the poorest 33 countries it was $270.

One percent of all TNCs own fifty percent of all FDI.

A third was transactions within a single corporation.

70 percent was controlled by 500 corporations.

In 1995, 358 billionaires were worth $760 billion, the same as the poorest 20 percent of the world's people.

When he was worth $40 billion, Microsoft chairman Bill Gates was worth more than the bottom 110 million Americans (40 percent of the population). By 1998, Gates was worth $59 billion; a year later, he was worth $85 billion. Gates is twice as wealthy as the second richest American, Microsoft co-founder Paul Allen (worth $40 billion). Number three in 1999 was Warren Buffett (chairman of Berkshire Hathaway, and worth $31 billion). Number four is Steve Ballmer, Microsoft's president (worth $23 billion). Number 5 is Dell Computer CEO Michael Dell (worth a mere $20 billion in 1999).

The world's three richest individuals have more wealth than the combined GDP of the 48 poorest countries.

Worldwide, the top incomes were 30 times greater than the bottom incomes; by 1989 it was 60 times, unless you calculate individuals rather than nations, in which case it was 150 times.

UNDP data on income distribution:
Top 20 percent receives 83 percent of all income.
Second 20 percent receives 12 percent
Third 20 percent receives 2 percent
Fourth 20 percent receives 2 percent
Bottom 20 percent receives 1 percent

 

Corporations: the Institution for Concentrating Wealth

The Global 500 has 25 percent of gross world output, and the Fortune 500 has 42 percent of U.S. gross national product. The world economy grows by two to three percent per year; transnational corporations grow by 8 to 10 percent. The ten largest corporations revenues are $801 billion, more than the hundred smallest countries.

"Ninety-eight percent of all companies in the United States account for only about 25 percent of the business on this country; the remaining 2 percent account for nearly 75 percent. The top 500 industrial corporations, which represent only one-tenth of one percent of this elite 2 percent, control over two-thirds of the business resources, employ two-thirds of the industrial workers, account for 60 percent of the sales, and collect over 70 percent of the profits."

The importance of transnational corporations in the world economy is demonstrated by the fact that about one half of the $700 billion in direct foreign investment by 20,000 companies in 1986 came from some 50 corporations. Sales by foreign affiliates of transnationals accounted for more than 40 per cent of total sales in the 1980s (up from 30 per cent in the early 1970s), and about one third of world trade was intra-firm trade.

  

Where the Wealth Goes: the Military

Two thirds of American foreign aid is military.

Where Your Income Tax Money Really Goes:

The 1997 federal budget according to the U.S. Government:

35 percent social security, medicare, other retirement

18 percent social programs

2 percent law enforcement & general government

9 percent physical, human, community development

22 percent military

14 percent interest payments

The 1997 federal budget according to the War Resisters League:

22 percent $286 billion current military

30 percent $377 billion past military

30 percent $381 billion human resources

12 percent $156 billion general government

6 percent $ 74 billion physical resources

 

Bibliography on Concentration of Wealth

AFL-CIO, Executive Paywatch Database
http://www.aflcio.org/paywatch/index.htm
http://www.aflcio.org/cgi-bin/aflcio.pl

Center for Popular Economics. A Field Guide to the U.S. Economy. New York: Pantheon Books, 1987. Rev. ed. 199?

Center for Popular Economics. Economic Report of the President People: An Alternative to the Economic Report of the President. Boston: South End Press, 1986.

Collins, Chuck, Betsy Leondar-Wright, and Holly Sklar. Shifting Fortunes: The Perils of the Growing American Wealth Gap. Boston: United for a Fair Economy, 1999.

Crystal, Graef. In Search of Excess: The Overcompensation of American Executives. 1991.

Federal Reserve Bank http://www.bog.frb.fed.us/
Federal Reserve Bank Survey of Consumer Finances http://www.bog.frb.fed.us/pubs/oss/oss2/scfindex.html

Hacker, Andrew. Money: Who Has How Much and Why. New York: Touchstone, 1997.

Organization for Economic Cooperation and Development. Income Distribution in OECD Countries.

Share the Wealth. United for a Fair Economy, 37 Temple Pl, 3rd floor, Boston MA 02111 http://www.stw.org

The Rich List: a Directory of America's Wealthiest People. Austin, TX: The Rich List; 1992. (Includes 1,600 people worth more than $25 million; brief biographies include source of wealth).

U.S. Bureau of Labor Statistics. Employment and Earnings.

U.S. Bureau of the Census Bureau: Historical statistics http://www.census.gov/hhes/income/histinc/ineqtoc.html

U.S. Bureau of the Census Bureau: Income 1999 by quintiles http://www.census.gov/hhes/income/income99/99tablef.html

U.S. Bureau of the Census Bureau: Income 1999 http://www.census.gov/hhes/www/income99.html

U.S. Bureau of the Census Bureau: Income statistics http://www.census.gov/hhes/www/previnc.html

U.S. Bureau of the Census Bureau: Wealth & assets http://www.census.gov/hhes/www/wealth.html

U.S. Bureau of the Census. Household Wealth and Asset Ownership http://www.census.gov/hhes/www/wealth.html

U.S. Bureau of the Census. Income and Poverty.

U.S. Bureau of the Census. Money Income in the United States.

U.S. Bureau of the Census. Money Income of Families, Households, and Persons in the United States. (Annual; CPR series P-60).

U.S. Bureau of the Census. Social and Economic Characteristics.

U.S. Bureau of the Census. Studies in the Distribution of Income.

U.S. Congress, Senate Committee on Government Operations. Disclosure of Corporate Ownership. Staff Report of the Subcommittee on Budgeting, Management and Expenditure, 93rd Cong., 2d Sess., May 4, 1974.

World Bank. World Development Report (annual).