The conservative Hudson Institute in 2017 reported that the wealthiest 5 percent of American households held 62.5 percent of all assets in the U.S. in 2013, up from 54.1 percent 30 years earlier. As a consequence, the wealth of the other 95 percent declined from 45.9 percent to 37.5 percent.
As a result, the median wealth of upper-income families (earning US$639,400 on average) was nearly seven times that of middle-income households ($96,500) in 2013, the widest gap in at least 30 years.
More notably, inequality scholars Emmanuel Saez and Gabriel Zucman found that the top 0.01 percent controlled 22 percent of all wealth in 2012, up from just 7 percent in 1979.
If you only looked at data on income inequality, however, you’d see a different picture. In 2013, for example, the top 5 percent of households earned just 30 percent of all U.S. income (compared with possessing nearly 63 percent of all wealth).
While the U.S. is not the only developed country that has seen wealth inequality rise over the past three decades, it is an outlier. The wealthiest 5 percent of households in the U.S. have almost 91 times more wealth than the median American household, the widest gap among 18 of the world’s most developed countries. The next highest is the Netherlands, which has a ratio less than half that.
he Tax Cuts and Jobs Act passed earlier this year will make this problem a whole lot worse.
The main features of the law include doubling the standard deduction for individual taxpayers, a temporary reduction in the top marginal tax rate from 39.6 percent to 37 percent, a significant reduction of the number of families subject to the estate tax and slashing the top corporate rate from 35 percent to 21 percent.
The main impact, however, is skewed to the wealthy. For example, the bottom 20 percent of households will see a lower tax bill of about $40 on average, compared with $5,420 for those in the top quintile. The richest 0.1 percent, meanwhile, will save $61,920. By 2025, the richest will see their benefit grow to $152,200, while everyone else won’t see much of a change. All the individual cuts are set to expire in 2026.
Wealthier taxpayers will also gain from the other main features of the new law. For example, research shows most benefits of lowering business taxes go to the rich, and fewer estates subject to the inheritance tax means more wealth accumulation across generations.
"If poor people knew how rich rich people are, there would be riots in the streets.” -
Actor and comedian Chris Rock
Actor and comedian Chris Rock
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