Income Gap Grows: Poor More as Rich Richer Than Ever
|December 6, 2013||Posted by Staff under Inequality / Concentration|
Top 1% Took Record share of 2012 US Income
The income gap between the richest 1 percent and the rest of America widened to a record last year.
The top 1 percent of U.S. earners collected 19.3 percent of household income in 2012, their largest share in Internal Revenue Service figures going back a century.
U.S. income inequality has been growing for almost three decades. But until last year, the top 1 percent’s share of pre-tax income had not yet surpassed the 18.7 percent it reached in 1927.
Incomes of the richest Americans might have surged last year in part because they cashed in stock holdings to avoid higher capital gains taxes that took effect in January.
Last year, the incomes of the top 1 percent rose 19.6 percent compared with a 1 percent increase for the remaining 99 percent.
Since the recession officially ended in June 2009, the top 1 percent have enjoyed the benefits of rising corporate profits and stock prices: 95 percent of the income gains reported since 2009 have gone to the top 1 percent.
That compares with a 45 percent share for the top 1 percent in the economic expansion of the 1990s and a 65 percent share from the expansion that followed the 2001 recession.
The top 10 percent haven’t done badly, either. Last year, they captured 48.2 percent of income, another record. Their biggest previous take was 46.3 percent in 1932.
The top 1 percent of American households had income above $394,000 last year. The top 10 percent had income exceeding $114,000.
Paul Krugman, New York Times columnist: Of the gains made by the top 10 percent, almost none went to the 90 percent to 95 percent group; in fact, the great bulk of gains went to the top 1 percent. In turn, the bulk of the gains of the top 1 percent went to the top 0.1 percent; and the bulk of those gains went to the top 0.01 percent. We really are talking about the flourishing of a tiny elite.
U.S. Poverty Rises Despite Economic Recovery
The number of U.S. residents living in poverty edged up to 46.5 million last year. Although the number of people in poverty went up from 46.2 million in 2011, the national poverty rate was unchanged at 15 percent. The poverty threshold in 2012 was an income of $23,492 for a family of four.
The recovery from the worst recession since the 1930s has been marked by a jump in stock prices to record highs, aided in part by the Federal Reserve’s ultra easy monetary policy.
While the Standard & Poor’s 500 index gained 16 percent on a total return basis last year, including reinvested dividends, the Census Bureau report showed median household income slipped to $51,017 from of $51,100 in 2011.
Although the bulk of the more than 8 million jobs lost during the downturn have been recouped, many of the jobs have been in services industries such as retail and restaurants that typically do not pay well.
About 16.1 million children and 3.9 million people aged 65 years and older were living in poverty last year. The uninsured rate for children in poverty was 12.9 percent compared with 7.7 percent for children not in poverty, the Census found.
Ed. Notes: The rich don’t get richer by working harder or smarter but by owning stocks of companies that own prime land and modern capital; those companies get subsidies from the government and their payouts get tax loopholes. Eventho’ it’s not fair, it is instructive: it shows how to end poverty.
That is, quit the corporate welfare and (perhaps surprisingly to some) quit the taxes on earnings. Instead uses taxes or fees or dues or leases to recover the worth of Earth, the annual rental value of sites and resources. Redirect that — all of society’s spending for nature — into the public treasury then back out again as dividends to members of society.
Then all remaining fortunes won’t be gifts from the state but truly earned and, more importantly, poverty will be no more. The dividend will provide a basic income and the combination of no taxes on earnings with a hefty charge for owning land, especially downtown locations, will greatly expand the opportunities for investment and employment. A wealth gap will remain, but it won’t be much; citizens at both ends of the spectrum will be able to see each other.